President Barack Obama thanked everyone from unions to executives for working to keep Chrysler LLC alive while blaming "a small group of speculators" for forcing the automaker into bankruptcy.

    "A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout," Obama said yesterday in Washington before Chrysler filed for bankruptcy protection.

    Now, the government and Chrysler plan to use bankruptcy to compel the dissidents, all secured creditors, to go along with a plan to create a more viable carmaker in partnership with Italy's Fiat SpA. In lashing out at the holdouts, Obama is attempting to rally the public behind his efforts to rescue the automaker, said Stuart Rothenberg, a Washington-based political analyst.

    "In the real world, you have good guys and bad guys, and at the moment, auto executives, hedge-fund managers and bankers are all in the bad-guy category," said Rothenberg. "He wants to be the guy who's solving the problems and wants to make it clear who's causing the problems."

    An anonymous group of 20 Chrysler lenders calling itself the "Committee of Chrysler Non-Tarp Lenders" said in a statement yesterday that they'd been treated worse than junior creditors during negotiations in violation of "long-recognized legal and business principles." They said they were owed $1 billion.

    OppenheimerFunds, Stairway

    The dissidents included OppenheimerFunds Inc., Perella Weinberg Capital Management LP and Stairway Capital Advisors, a person representing the group said, asking not to be identified. Also in their camp is Group G Capital Partners LLC, said another person who declined to be named.

    After the president's comments yesterday, Perella said it had agreed to the buyout offer.

    Obama's team had first offered secured lenders $2 billion for their $6.9 billion in loans, and then raised the offer to $2.25 billion. In a game of chicken, the holdouts asked for $2.5 billion, and Obama's patience ran out.

    "They were hoping that everybody else would make sacrifices and they would have to make none," Obama said. "Some demanded twice the return that other lenders were getting."

    Banks including JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley and Goldman Sachs Group Inc. lent Chrysler $6.9 billion, reselling some of their secured loans at discounts to investors. Chrysler took a $4 billion bailout loan from the U.S. Treasury and was racing to reduce debt to meet a government deadline for more aid, after workers agreed to give up $10 billion in future pension benefits.

    Deadline Ignored

    While lenders representing 70 percent of the Chrysler loans agreed to Obama's offer of $2.25 billion in cash, the dissidents ignored a deadline of 6 p.m. on April 29, according to one of the investors who declined to be named.

    Many dissidents paid from 50 cents to 70 cents on the dollar for their Chrysler loans, so they're sitting on losses, according to people familiar with the matter.

    Ronald E. Kolka, Chrysler's chief financial officer, said in a court filing that the first-lien debt is trading at about 15 cents on the dollar in the secondary market.

    Chrysler, with about 54,000 employees, listed assets and debt of more than $1 billion in documents filed in U.S. Bankruptcy Court in New York. As of Dec. 31, Chrysler companies had assets of about $39.3 billion and liabilities of $55.2 billion, according to court filings.

    Dan Arbess, a partner at New York-based Perella, didn't return calls seeking comment. John Rijo, principal of Uniondale, New York-based Stairway, and Group G Capital Chairman Geoffrey Gwin declined to comment.

    Greater Sacrifices

    OppenheimerFunds, based in New York, said it rejected the offers because the government "unfairly" demanded that the fund's shareholders make greater sacrifices than were being asked of unsecured creditors.

    "Our holdings in secured Chrysler debt are entitled to priority in long-established U.S. bankruptcy law, and we are obligated to our fund shareholders to support agreements that respect these laws," the company said in an e-mail.

    In the deal Chrysler tried to conclude out of court, Fiat would have become a 20 percent owner of Chrysler, and a union retiree health-care trust fund would hold 55 percent, with the rest of the company staying in the government's hands initially, according to people familiar with the matter. The government intends to replicate this model, using bankruptcy to set up a new company, people familiar with the plan said.

    "Absolute Priority"

    Chrysler's dissident lenders have on their side the "absolute priority" bankruptcy rule, which holds that value must be distributed according to the legal priorities of the stakeholders. What riled the group that put out the statement yesterday was that junior creditors - a workers health-care trust - would get equity in a new Chrysler entity while the group's members wouldn't.

    "Junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full," the dissidents said in the statement.

    The absolute priority rule is regularly modified in bankruptcy court, said Richard Hahn, co-chairman of the bankruptcy practice at Debevoise & Plimpton LLP, a New York law firm that isn't involved in the Chrysler negotiations. Two-thirds of the lenders can force the holdouts to go along with them in a procedure called a cram-down.

    Cram-Down

    "The U.S. bankruptcy code foresees the possibility that it may be necessary to vary from absolute priority, in particular when a two-thirds majority is convinced it makes legal or business sense," Hahn said. "If the government has consents from 70 percent, that's more than enough" to give equity to junior creditors.

    The dissidents "may be calculating that they can get more money by waiting a bit longer," Hahn said. "Presumably they will file objections in court. The issue is less whether they'll win than whether they can cause a meaningful delay that may cause Chrysler or the government to come to an accommodation."

    As they engage in that next game of chicken, the dissidents may receive more of the public condemnation they got yesterday from Obama and from lawmakers including Representative John Dingell, a Michigan Democrat.

    "The rogue hedge funds that refused to agree to a fair offer to exchange debt for cash from the U.S. Treasury - firms I label as the 'vultures' - will now be dealt with accordingly in court," Dingell said.

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    The case is In re: Chrysler LLC, 09-50002, U.S. Bankruptcy Court, Southern District of New York (Manhattan).