MEBRO
FACT CHECK #FE-EISMU
06/18/26 · 11:40 PM UTC · 10 SOURCES
“Barack Obama abrogated bankruptcy law to turn over control of companies to his union supporters.”
LEANS TRUE · HIGH CONFIDENCE
TL;DR ·Obama’s auto bailout favored unions over secured creditors but did not grant them total control.
WHAT WE FOUND
The claim is a MIXTURE of documented facts regarding preferential treatment and hyperbolic descriptions of legal and corporate outcomes. During the 2009 bankruptcies of Chrysler and General Motors, the Obama administration intervened to set terms that favored the United Auto Workers (UAW) over secured creditors . Multiple sources and legal critics argue this was a subversion of standard bankruptcy law, specifically the absolute priority rule, which requires secured creditors to be paid before junior creditors like labor unions . In the Chrysler case, secured creditors were pressured into accepting 30 cents on the dollar while the UAW received a significantly higher recovery . The UAW was granted over $26 billion in the form of stock and promissory notes for retiree health care trusts . However, the claim that Obama abrogated (formally abolished) bankruptcy law is inaccurate; the administration utilized a specific, albeit highly controversial, application of section 363 of the Bankruptcy Code . Furthermore, control was not turned over solely to the union; the U.S. government took a temporary 60% equity stake in GM, and Fiat took ownership of Chrysler .
SOURCES
- 1 · coons.senate.govACADEMICPresident Obama signs Senator Coons’ bill to avert crisis in America’s bankruptcy courts
TIER A
- 2 · politifact.comFACT-CHECKERAllow bankruptcy judges to modify terms of a home mortgage
TIER A
- 3 · law.stanford.eduFACT-CHECKERFact Checking Obama's 2011 State Of The Union
TIER A
- 4 · buckeyeinstitute.orgACADEMICThe Obama Administration's Auto Bailout Failure
TIER A
- 5 · en.wikipedia.orgWEBBarack Obama - Wikipedia
TIER B
- 6 · heritage.orgWEBObama's Union Bailout | The Heritage Foundation
TIER B
- 7 · mercatus.orgWEBObama's United Auto Workers Bailout | Mercatus Center
TIER B
- 8 · cato.orgWEBTop 10 Ways Obama Violated the Constitution during His Presidency | Cato Institute
TIER B
- 9 · obamaspeeches.comWEBObama Speech - OBAMA ON S.256, THE BANKRUPTCY ABUSE AND PREVENTION ACT OF 2005 - Compete Text
TIER B
- 10 · propublica.orgWEBDems: Obama Broke Pledge to Force Banks to Help Homeowners — ProPublica
TIER B
CHECK #______
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