NEW YORK (Reuters) – Perella Weinberg Partners denied statements made by a lawyer that the investment bank received threats from White House officials to drop its opposition to a plan for keeping automaker Chrysler LLC out of bankruptcy.
The banking boutique, which prefers to operate in the background, found itself in the spotlight Thursday when President Obama announced the automaker’s bankruptcy and took aim at investment firms that did not sign off on the White House restructuring plan.
Roughly 20 secured lenders, including PWP, had objected to a deal that offered them just 29 cents on the dollar. Typically, secured lenders get priority in a bankruptcy restructuring.
Shortly after the Obama press conference, Perella Weinberg changed its stance and said it supported the deal.
Thomas Lauria, a White & Case lawyer representing the roughly 20 secured creditors, later told a Detroit radio station that Perella Weinberg received threats from the White House to support the plan.
In a separate interview later with ABC News, Lauria identified the White House auto task force leader Steven Rattner as the official making the threat.
Yet Perella Weinberg said “suggestions” that its Xerion Fund, which holds the Chrysler debt, changed it stance under political pressure are “incorrect.” The change reflected the belief that a lengthy courtroom fight would cause even more harm to investors.
“In considering the President’s words and exercising our best investment judgment, we concluded that the risks of potentially severe capital loss that could arise from fighting this in bankruptcy court far outweighed any realistic potential upside,” PWP said.
Bank spokeswoman Denise DesChenes declined further comment. Lauria was not available for comment. White House officials earlier denied that any threats were made.
Perella Weinberg, in the statement, also called on other dissidents to support the White House deal.
“We believe a settlement would now be in the best interests of all parties in the context of avoiding a drawn out contested bankruptcy litigation proceeding,” the firm said.
The controversial intervention by the Obama administration into Chrysler drew more fire when Lauria told a Detroit radio station, “One of my clients was directly threatened by the White House.”
The firm, later identified as PWP, was “compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”
The secured creditor group remains largely anonymous, with the exception of steering committee members PWP, OppenheimerFunds, Stairway Capital Management and Elliott Management.
Oppenheimer and Stairway remain opposed to the Obama plan. Elliott supported the proposal.
(Reporting by Joseph A. Giannone)