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 ...
They've turned down two offers. I suspect the worst. This will effect a number of funds. They should just dump the company into an ESOT during BKY and let the UAW worry about the future. Employee owned and operated....
Or... everyone could just stop buying Chrysler cars and watch the show! This could be our golden opportunity to bankrupt the UAW!!!!
I can’t tell you how angry that makes me that the cushy Union retirement benefits are protected in all this. It was the Unions which killed the American automobile industry.
If the union has a claim, they can file it like any other damn creditor.
Hey, this isn’t fair at all. The UAWs get their pensions guaranteed but where is the bailout for the union itself? And where is the bailout for all the supporting industries such as parts suppliers, distributors and businesses who served the auto industry. This just isn’t fair.
The union is going to be losing membership fees. Those fees need to be guaranteed also. And what about the donations the union makes to democrats? Will there be bailout funds available to continue this tradition? How about a political donation protection fund? /s
The retirees worked for their pensions-paid into their pension
Where does this all stop?
A 401K is an investment tool. Pensions are guaranteed or supposed to be...we bend over backwards to honor banking CEO bonuses with taxpayer funds, but shred pension contracts...it’s wrong. One could make the same argument about bonuses...where does it end?
Thanks, I was told about this but misplaced it-could not find the post. This time I’ll bookmark it...thanks again.
I don’t either...it must be short selling-manipulate a stock by rumor or whatever and drive down the price...then when it goes up buy it...I actually have no idea...it seems like mostly emotion to me.
>>The accomplishments of Obama’s first 100 days continue to mount...<<
The only thing he is mounting is the American taxpayer.
OMG! Hilariously incorrect.
Who loaned the $1,216 trillion dollars? Where did they get it?
Who put up the $64 trillion dollars that wasn't borrowed? Where did they get it?
Kevin DeMeritt, president of Lear Financial, is an idiot!
Banks yes, but bondholder????
Pensions are supposed to be guaranteed by whom? A pension is a contractual right to be enforced against one’s employer, just like a CEO’s bonus. If the employer can’t pay, they can’t pay. The government is not a party to that contract. The only reason the government is involved is because, through ERISA and the PBGC, the federal government has decided to give preferential treatment to workers who have received pensions as a benefit of employment (largely unionized), and discriminate against the majority of taxpayers who must rely on other methods of funding their retirement.
Chrysler’s pensioners should be treated like any other creditors, and should get in line with the rest of them according to the law of bankruptcy. They have no right to expect the taxpayers to guarantee their own private contract rights. And, seriously, you don’t see anyone here applauding taxpayer funding of executive bonuses, so I don’t see how that straw man is particularly relevant. Frankly, I’m sick of people with pensions claiming that society owes them a secure retirement when the rest of us have to fend for ourselves.
As for your earlier reply to me, I did read the article, and I just read it again, as well as a Wall Street Journal article on the same subject. None of them mention a plan for Chrysler to offload its pension obligation onto the UAW or anyone else. It merely mentions “protection” of the benefits. I’d be interested in seeing the details of this plan you’re mentioning. If they get their retirements taken care of because they’re part of a politically well-connected union while Chrysler’s other creditors get hosed (which indirectly includes a lot of middle-class Americans through their own private retirement accounts), then yes, it is wrong.
Where does it end? It ends when the government enforces contracts like they’re supposed to rather than mucking around with them and altering their terms. That’s the role of government in a market economy, which we’re still supposed to have, allegedly.
That is coming soon.
401s folded in SS.
Ok, why the big deal? We taxpayers already have many, many huge unions attached to us like leeches as it is. The Public Employee Unions! I’m sure the UAW envies the heck out them with all the largess they bleed from us every minute of every day. If the UAW is killing the US automakers then the PEU (public employee unions) will kill the country just as surely. Not to mention that the PEU’s have more power over the average citizen than the UAW ever has had in its wildest dreams.
Now, about the contract hullabaloo and the comparison with AIG.
The contracts that the UAW had with Chrysler end when Chrysler ends. AIG hasn’t ended yet. If the pension gaurantee program has to pick up the costs as best they can, then proceeds from Chrysler’s bk should pay it back. The union contract with Chrysler is not a public obligation. The contracts that AIG made with the people AIG was incentivising to stay with AIG to help unravel the mess that AIG got itself into were made with full knowledge of the the Govt. (Dodd, Obama put the wording into the law) and paid for with funds taken from the still functioning AIG. Yes, the treasury pumped our money into AIG, those contract employees got paid with our money in all probability, but under control of AIG, not a bk court. Chrysler paid UAW workers with our money too (bailout “loans”), but only until they declare chapter 11. Had AIG gone bk before those contracts were fully paid, then those contracts too would have been subject to be broken in bk court, just like Chryslers’ would be if we didn’t have National Socialist Democrats in control of our Govt.
These were different contracts, with different situations, with different companies. Just because the people in one scenario are more wealthy than the people in the other does not make it right to favor one side over the other. They should be treated equally under the law depending on the circumstances of the individual (or collective) contracts in a court of law, not by class envy, nor mob mentality.
The talk radio goldmonger?
LOLROTFLMAO
Not only that, but the UAW pensions are already regulated and protected by ERISA. Evidently that isn’t enough preferential treatment for them.
PART 2 in a SERIES: Of the 7 Los Angeles County Gold Companies researched, Lear Financial ranks last in each of the following categories:
1.The Better Business Bureau Rating
2.Years in Business
3.Published Coin Fees
Maybe the conservatives are a bit too late, and the Pubes were always liberal at heart.
Though it leaves me curious. Once this happens, won’t the union in Michigan be significantly smaller with time...and less influential?
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