Posted on 04/23/2009 12:48:06 PM PDT by MaestroLC
DETROIT — The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that could come as soon as next week, people with direct knowledge of the action said Thursday.
The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing, said these people, who asked for anonymity because they were not authorized to discuss the case.
Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.
The only major question that remains unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler. Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake.
Officials at Chrysler and the Treasury were not immediately available for comment.
A bankruptcy filing by Chrysler would be the first among Detroit’s troubled automakers, who have been mired in a devastating sales slump since last fall. Treasury is also working with General Motors to prepare a possible bankruptcy case, and the terms of a Chrysler filing might offer a glimpse into the shape of G.M.’s own filing.
Some analysts questioned whether the Treasury’s steps to prepare a bankruptcy case were an effort to put more pressure on lenders, with which it has exchanged proposals meant to reduce Chrysler’s debt. Chrysler faces an April 30 deadline from the Treasury, while G.M. faces a June 1 deadline in its own efforts to draft a new restructuring plan.
(Excerpt) Read more at nytimes.com ...
Bush should have done this. How many billions down the drain?
“Bush should have done this. How many billions down the drain?”
Have you read the plan? It’s not a bankruptcy - it’s a UAW bailout with a “bankruptcy” label. Taxpayers pay for the UAW health and pension benefits. It’s an outrage.
So now YOU the people can keep on paying the retirement benefits for overfed, underworked, overpaid auto makers in Detroit that rode their pony into the ground!
The seeds of Chrysler’s and GM’s bankruptcies were sown decades before Obama came into office, when labor liberals decided to make it damned near impossible for a company to say no to any demand from a labor union.
Smells like a Sunday night filing.
The devil is in the details. What guarantees are they really given the UAW? Are they saving the UAW at the expense of the lenders?
Yes it is an outrage, but if the autos go, we will pay for the pensions anyway just like the Airlines.
Which is why Bush should have done this. He should have forced a real Chapter 11, not this phony UAW bailout in disguise. The billions down the drain are in the future as well as the past. And if you think this is bad wait until GM files.
Since when are conditions a part of Chapter 11?
The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler
Is appalling.
Treasury has an agreement in principle with the United Automobile Workers union
Who cares? It's Chrysler's business and Treasury should have no say in their bk decisions.
The pensions are protected by the Pension Benefit Guarantee Corporation. Besides, Pensions liabilities are supposed to be funded in advance of need, FAR in advance of need, so I do not see the relevance here. It is just Obama trying to act like he is doing something.
On the health insurance issue? This is ridiculous! Why should GM continue to fund an expense that does NOTHING for the current competitiveness of GM?
I find this heinous.
Let them get 22¢ on the $ like the bondholders. They've been overcompensated and underworked for years. It will average out.
They are sacrificing current workers though it appears. I don’t know how many more job losses we can absorb and still climb out of this mess.
Has the Treasury Department previously been involved in the preparation of a Chapter 11 bankruptcy? I thought the Justice dept. would be the likely place to file.
See my post number 10.
The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing
That practically guarantees no private entity will be lending money to a reorganized Chrysler. The US is in the Car Business permanently if they want Chrysler to survive.
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