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 ...
That’d be great for kids.
That’s what has to be done, educate kids in the what was and what will (may) be again.
For the near future....it’s gonna be a rocky ride.
Fannie Mae and Freddie Mac were a far bigger fraud and bigger bonuses than AIG.
The UAW will take over the legacy cost they will receive half stock and and another half in cash in a ten year period...this is a done deal...the government is guaranteeing the retirees if Chrysler can’t come up with the cash.
Very true...as always you get it. My husband deals with union every day...they can be real pains in the tushie especially now with the upheaval...believe me I understand about unions.
They won't have a choice. It is going to happen no matter what IMHO.
No, AIG has cost about a trillion and is receiving more...AIg is the worst of the worst...not that I like Fannie or Freddie mind you...or any of the bailed out banksters either.
Not so fast. There are bankruptcy laws that protect the interests of all parties. BO thinks he can ignore the investors to help the Dems favorite groups is going to have problems in court. There is a set lawful procedure for bankruptcies. One lawsuit by the bondholders and investors will throw the gov plan into turmoil. Chryslet management, thru gov cannot make a separate sweetheart deal with the UAW and bypass bankruptcy laws. The UAW is being taken for a ride. Wait till they find out that the move is illegal and nullified by the courts.
They are being bailed out if you look at this article.
My only thought is that if no one will buy there product, it is all for naught anyways.
How does this help Chrysler come out of bankruptcy?
Or will thay?
Most UAW contracts were bloated welfare programs however they are no less valid than the egregious compensation packages that were agreed to for corporate executives.
I support contracts, whether they be for executives or union workers, but why should I be forced into renewing a contract that is detremental to my business??? Any company, or anyone, for that matter, should have the right not to renew a contract when it expires. If the workers don't want to work for that company without a union contract, they are free to go elsewhere, I'm sure there are thousands of others who would jump at the chance to have their job without the burdon of a union.
For those of you who drink only union kool-aid, the days of $2 a day wages are long gone. I'm sure that a non-union shop would pay less than the formerly union shop, but they would still pay more than enough for someone to live on, if people would live within their means.
As unemployment decreases because of the rise of non-union factories, wages will rise in order to maintain the workforce and reduce turnover. Turnover is expensive for a business, and good businesses avoid it.
Simply put, there is no reason for a union to exist today except to siphon off profits from businesses. They are a legalized form of racketeering, much like the government.
Banks are cut out of their money everyday in bankruptcy courts...watch this will sale through....some kind of pre-package deal.
Again, you buy into the myth that manufacturing will come back when the unions are gone...it won’t. Many non-union jobs have been shipped overseas because we can not match the wages in third world countries...jobs in tech manufacturing for example. As for renewing a contract, both parties have to agree to such. If you just shred a contract, you are breaking it-whether it is a UAW contract or an AIG contract.
Chrysler will be relieved of their obligation...they will pay off the UAW with half stock and half cash in 10 years via profits if they are successful...if Chrysler does not have enough to pay the cash installment within ten years, the government will pay it.
Did you read the article? They are doing this...it will be shifted to the UAW for stock and cash. Thus they will have the obligation removed...if they are profitable, they will still pay half in cash in a ten years period, if not the government picks up the tab also know as the taxpayers.
You do it the same way that you pull the rug from a chrysler family dealership, an retired grandma who owned a chrysler bond, the taxpayers who instead of saving for retirment will pick up the tab, the college kids who will be paying for this forever.
Bottomline: Bankruptcy means all stakeholders get hosed. No one gets out. This practice also fosters cooperation among all interested parties for a successful enterprise. Exempting retirees turn them into obstinate, entitlement a$$holes.
If you just shred a contract, you are breaking it-whether it is a UAW contract or an AIG contract.
The arbitrary breaking of contracts seems to be a primary feature of this new administration.
everyone here supports upholding union contracts outside of bankruptcy. once a company goes bk, all bets are off on the unions and the management and the executives.
We don't have the votes to do anything.
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