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 ...
Of course not. They're doing it for a corrupt union.
Well that means the Unions Will get stiffed if they are relying on profits and stock value but, the article said that, “pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing”. How far is the government going to go to “Protect” the retirees? Are they going to write checks if Chrysler does not make a profit or the stock price stays in the toilet?
Well, let’s hope for success because then Chrysler would pay legacy costs to the union which is taking it over and not the taxpayer.
Why are the Feds preparing the paperwork and not Chrysler? That is not their job!
We the tax payers pick up the tab.
Since when does the Treasury department file banruptcy for a private company? This doesn’t smell right at all.
The next day, it will be open season on the UAW. They must not be allowed to persist.
Half of the costs will be given the UAW in the form of stock, the other half will be given to the UAW over a ten year period by Chrysler or more likely Fiat...if for some reason, the company could not meet the Legacy obligation, the government will guarantee it.
Yeah, sure. Why should they when they can walk away from the deal and then buy the pieces they want for basically nothing? Unless Obama can strong-arm them, which I doubt. More likely, he'll make them an offer they can't refuse - and the taxpayer will once again be expected to pay for his "great" ideas.
So UAW abuses a company until there’s nothing but a hollowed out husk, realize they’ve killed the milk cow, then cry to Obama who says “Not to worry, we’ll just savage the taxpayer now.” We’ve all been Gettelfingered.
Fiat is still in the deal...the reason for this is the bondholders have refused to budge...they get stiffed. Also, I don’t think the bondholder will get their credit default swap money this way either. Perhaps they will accept the government offer and this bankruptcy will be avoided.
Can the bondholders stop this? How do the unions come before the bondholders??
yes. well done comrade
There you go! The taxpayers are paying it. There is little chance of Stock prices or profits equal to the cost of the pensions and health care.
It’s just about time.....
We are being sheared like fat sheep.
Have you seen this? Everyone’s saying this is another 0 accomplishment. The customized bankruptcy certainly is.
The UAW is one of the biggest bondholders, and they didn’t budge either.
Wonder why.
Obviously you're not in one of the favored classes of the People's Republic of the US.
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