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In the past decade lenders have learned how to play the chapter 11 game.  They lock up all of the debtors assets with security interests and make strong demands, like quick 363 sales and "roll overs" of pre-petition debt into post-petition credit lines, as the price for allowing a reorganization case to even happen. In this way, the Treasury is simply playing the institutional lenders' game -- exerting a lot of control over the chapter 11 process as the result of the DIP financing it is providing.

Thus, when I see these same institutional investors acting like Captain Renault, I'm skeptical.  And when I see the financial press suddenly expressing shock at these practices, I say "where have you been?"

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