Chrysler to file for bankruptcy

[Lilac Hill]

Chrysler LLC is going to file for bankruptcy, an administration official confirmed to CNN Thursday.

The filing comes after some of the company's smaller lenders refused a Treasury Department demand to reduce the amount of money the troubled automaker owed them.

Chrysler officials had no comment on the bankruptcy report. The company faces a Thursday deadline from the Treasury Department to reach deals with creditors who had loaned the company about $7 billion.

But the filing will not mean the halt of operations or liquidation for the troubled 85-year old automaker. Instead, the administration expects to use the bankruptcy process to join Chrysler with Italian automaker Fiat.

In addition, the United Auto Workers union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night.

President Obama said during a press conference Wednesday night that he was more confident than he had been 30 days ago that Chrysler would be able to emerge from the process as a healthy, competitive company. He is set to comment on the state of the auto industry at noon on Thursday.

The administration said Wednesday evening that talks with the smaller lenders broke down when they refused to meet a deadline set by the Treasury Department to accept pennies on the dollars they had loaned the company.

"After a month of tireless negotiations, the Administration went into yesterday afternoon with the full support of Chrysler's key stakeholders, including the [United Auto Workers union] and the largest creditors. That support remains," said an administration official.

Major banks such as Citigroup and JPMorgan Chase agreed to reduce their portion of $7 billion in secured loans to a more manageable $2.25 billion, according to the administration official. But some smaller lenders, including hedge funds, refused to accept the deal.

"The agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," said the administration official.

"Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward," the official added.

http://money.cnn.com/2009/04/30/news/companies/chrysler_bankruptcy/index.htm?postversion=2009043009

I am overwhelmed by surprise. *coughs*

 

[Misty]

BUT OBAMA IS GOING TO BAIL THEM OUT TO APPEASE THE UNIONS!!! OH NOES, SOCIALISM!!

yeah, i'm not really surprised - it was evident for a while that Chrysler was a mess.

 

[Nicoleta01]

Yeah, if a person (or group) can't manage a company, then just fail, don't whine and moan. XD Like no one saw this coming really....

 

[$aturn¥oshi]

Does this mean no more PT Cruisers?

 

[Netto Azure]

I guess so.

It was necessary to save most of the jobs there. If they were on the verge of Bankruptcy then Ch.11 is the way to go. D:

If only the US Government was this strict with the US Banking system. D: D: D:

 

[Legacy]

I guess so.

It was necessary to save most of the jobs there. If they were on the verge of Bankruptcy then Ch.11 is the way to go. D:

If only the US Government was this strict with the US Banking system. D: D: D:

amen.

 

[the gadfly]

Chrysler was bought by Daimler-Benz and everyone said it would save the company. Then Daimler-Benz bailed and Cerburus bought the company and everyone said hard-nosed money managers would save Chrysler. Now Fiat is the savior--the company most Americans, if they have any opinion about Fiat, remember Fiat as an acronym for "Fix It Again Tony" before they left the American market in the '80s.

Why am I not optimistic?