President Barack Obama plans to announce tomorrow that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA, people involved in the matter said.
Administration officials are still resolving outstanding issues, and the plan is not finished yet, said one of the people, who declined to be named. Any bankruptcy filing could come as soon as tomorrow, people familiar with the matter said.
Chrysler’s best assets would be sold to a new entity that would have an ownership structure similar to that envisioned in an out-of-court deal between the Auburn Hills, Michigan-base automaker and Turin, Italy-based Fiat, the people said.
The Italian company would become a 20 percent owner of Chrysler, and a union retiree health-care trust fund would own 55 percent, with the rest of the company staying in the government’s hands initially, people familiar with the matter said.
Chrysler has made progress in out-of-court restructuring, including reaching labor deals with the United Auto Workers union and Canadian Auto Workers on new contracts. Chrysler Chief Executive Officer Bob Nardelli said today in a memo to employees that the company is waiting to hear whether its 46 lenders will agree to take $2 billion in cash to wipe out $6.9 billion in secured debt.
(Bloomberg.com)
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4 Responses
Who made Obama the spokesman for Chrysler? Where did this megalomaniacal madman come from?
The plan is contingent on the secured creditors giving up their claims on the company’s assets. While some of the creditors are banks who have been “bailed out”, the independent ones are unlikely to give away assets. The UAW is “in cahoots” with the administration, and the “bailed out” banks have in effected been paid under the table, but under American law, the other secured creditors have a right to 100% of the assets of the company before the UAW, or the Federal government, or the existing owners, get a dime.
will the gouverment get back our Tax dollar bail out money they got?
and #1 i think thats the answer to your quetion.
#1 – The administration is trying to broker a deal that keeps Chrysler in business, and keeps its unionized workers happy (payback for backing the right horse in the recent election). They also don’t want to get stuck with the bill for the pensions which are insured by the federal government, and recover some of the money the Treasury loaned Chrsyler. The problem with the agreement is that the secured lenders are entitled to get paid in full before the UAW, since the union is an unsecured creditor.