Chrysler to be placed in bankruptcy protection

[Dragon]

http://business.theglobeandmail.com/servle...y/Business/home

[Intrepidation]

The beginning of the end?

[Robert Hall]

Or the end of the current Cerebus phase and beginning of a new phase...

[Intrepidation]

We will see, the reports have been running wild with Bankruptcy talks since last week.

[Robert Hall]

Detroit News article

Detroit News Article: Bankrupktcy Looming for Chrysler

[Intrepidation]

Notice how "banks and hedge funds" are the remaining problem and why Chrysler would have to file Ch. 11.

[Daryl Z71]

Notice how "banks and hedge funds" are the remaining problem and why Chrysler would have to file Ch. 11.

Yea seems like they satisfied what the Government wants just not the banks.

[DBeaSSt]

Well, with one more business day until the governments deadline and no major announcements yet, I guess the probability is pretty high. I just hope it ends up being good for Chrysler in the long run. I'd like to have at least TWO AMERICAN owned car companies to choose from!

What daimler did to Chrysler still pisses me off and because of it, I'll never own one of their products.

Edited April 29, 2009 by DBeaSSt

[FAPTurbo]

Man with the UAW owning 55% of the company, who wants to bet ChryCo will be off the cliff in like, three months?

[Robert Hall]

Another article

CNN Articl

[haypops]

I wonder how predictive of GM's future these details are? Perhaps the UAW becoming stake holders and giving concessions will be similar. Of course there would be no Fiat ownership. Another difference would be that GM's debt isn't secured but Chrysler's is (or so I read).

[deftonesfan867]

They just reported on MSNBC a bit ago that Fiat WILL be merging with Chrysler and that Chrysler will avoid liquidation.

[DBeaSSt]

http://online.wsj.com/article/SB124109550079373043.html

WASHINGTON – An Obama administration official said that Chrysler LLC, after failing to convince all of its lenders to agree to a debt-reduction deal, will file for a Chapter 11 bankruptcy.

President Barack Obama will deliver remarks on the auto industry at noon.

Earlier Thursday an administration official said the restructuring of Chrysler LLC will go forward even though a handful of hedge funds have refused to accept the Treasury Department's offer to cut the auto maker's debt.

"Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments" by Chrysler, its ...

So, Ch11 unless someone makes a quickie deal in the next two hours.

Edited April 30, 2009 by DBeaSSt

[Intrepidation]

Looks like they're filing. I'm not surprised, but I am pissed that this is happening because the banks and hedge funds couldn't concede...you know...banks like AIG...the ones who got hundreds of billions of dollars thrown at them from the government. As far as I know they were the last obstacle.

[Daryl Z71]

Looks like they're filing. I'm not surprised, but I am pissed that this is happening because the banks and hedge funds couldn't concede...you know...banks like AIG...the ones who got hundreds of billions of dollars thrown at them from the government. As far as I know they were the last obstacle.

Greed...

[Intrepidation]

Greed...

Yup.

[Daryl Z71]

Yup.

Nobodys interested in helping anyone out anymore. Its a sad day when a bank doesn't want to help a company out so their workers can keep their jobs. Greedy Greedy Greedy!

[Intrepidation]

I wish AIG had been forced into bankruptcy...Ch7 though...let them die, and the leftovers be used to form smaller banks.

[Daryl Z71]

I wish AIG had been forced into bankruptcy...Ch7 though...let them die, and the leftovers be used to form smaller banks.

Now that would be the easy way to do it. See the politicans couldn't waste our money if they did it that way.

[daves87rs]

I wish AIG had been forced into bankruptcy...Ch7 though...let them die, and the leftovers be used to form smaller banks.

+1

[DBeaSSt]

A little more light shed on the situation.

http://blogs.wsj.com/deals/2009/04/30/stat...rs-of-chrysler/

By Stephen Grocer

The Obama administration on Wednesday failed to convince all of Chrysler’s lenders to agree to a debt-reduction deal. The administration’s auto task force tried to get all 46 of Chrysler’s secured lenders onboard, but a number of funds voted no. Now President Obama is expected to announce that Chrysler is going to seek reorganization in bankruptcy court. Here’s the letter from the from non-TARP lenders to Chrysler explaining their decision to vote no.

* * *

April 30, 2009 — As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.

As much as anyone, we want to see Chrysler emerge from its current situation as a viable American company, and we are committed to doing what we can to help. Indeed, we have made significant concessions toward this end — although we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.

What created this much-publicized impasse? Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with 100% recoveries, while even GM’s unsecured bondholders are receiving a far better recovery than we are as Chrysler’s first lien secured lenders.

Our offer has been flatly rejected or ignored. The fact is, in this process and in its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.

We have a fiduciary responsibility to all those teachers, pensioners, retirees and others who have entrusted their money to us. We are legally bound to protect their interests. Much as we empathize with Chrysler’s other stakeholders, the capital is just not ours to contribute to their cause by accepting a deal that is outside the well established legal framework and cannot be rationalized as being commercially reasonable.

We are continuing to discuss our position with the United States Treasury. We have made a proposal which we earnestly believe is fair and would appropriately recognize our legal position.

As President Obama implied yesterday, it is likely that Chrysler will have to file Chapter 11 whether or not all lenders agree to any particular proposal. Chapter 11 is often used to help implement an agreed deal and dispose of unwanted legacy liabilities. We are hopeful and optimistic that we will reach a positive resolution of our issues so that all stakeholders will move forward together to implement Chrysler’s “quick trip” restructuring in an un-contested proceeding. Our Group will never initiate a bankruptcy filing on Chrysler — that is a decision for the Company and the Administration to make.

As we all appreciate, laws are the foundation of our economy and society. Despite recent travails, our country remains the economic envy of the world and the United States remains a vital engine of global growth. The rule of law made it that way. We urge that people remember this and not succumb to unproductive and unwarranted finger pointing.

Sincerely,

The Committee of Chrysler Non-Tarp Lenders

[MyerShift]

I am very dissatisfied with all of this.

[mustang84]

40 hedge fund managers are sticking it to hundreds of thousands of Chrysler employees and retirees. Hedge funds are a cancer to this economy...we need to eliminate them like Europe is currently doing.

[DBeaSSt]

Bankruptcy filed and deal with Fiat signed. Note bolded text, for once I agree with him...

http://news.yahoo.com/s/nm/20090430/bs_nm/us_autos_17

DETROIT/WASHINGTON (Reuters) – Chrysler LLC -- battered for the past two years by disappearing global auto sales and the credit crisis -- filed for bankruptcy on Thursday and announced an industry-changing deal with Fiat after talks to restructure its debt broke down.

Despite weeks of intense negotiations, Chrysler failed to gain the full support from its lenders to avoid the first-ever bankruptcy filing by a major U.S. automaker.

The move was hailed by President Barack Obama as a critical step in saving 30,000 jobs at Chrysler and hundreds of thousands more jobs in affiliated suppliers and dealers.

At the same time, Chrysler as expected entered into an alliance with Italian automaker Fiat SpA where it sold a stake starting at 20 percent and in which Fiat can become the majority owner once the government loans are repaid.

The Chapter 11 filing, in U.S. Bankruptcy Court in Manhattan, sent shock waves through the entire industry -- including Chrysler's rivals, suppliers, dealers and the hundreds of thousands who rely on the industry for their livelihoods.

As part of the filing, the U.S. government will provide up to $3.5 billion in debtor-in-possession (DIP) financing and up to $4.5 billion in exit financing. Obama said he hopes the entire process will take only 30 to 60 days.

(Click on http://static.reuters.com/resources/media/...er%20filing.pdf to see the full filing)

The legal proceedings will be overseen by Judge Arthur Gonzalez, the same jurist who oversaw the Enron Corp and WorldCom Inc bankruptcies.

FIGHTIN' WORDS

The bankruptcy signals that Obama is prepared to play hardball with holdout lenders rather than knuckle under to their demands and will likely set the tone for similar discussions with bondholders of General Motors Corp -- which is now on the clock to restructure its operations by the end of May.

While Obama voiced his support for Chrysler and the deal with Fiat, he was pointed in his criticism of the investors who did not agree to this deal.

"I don't stand with them. I stand with Chrysler's employees and their families and communities," the president said. "I don't stand with those who held out when everybody else is making sacrifices. That's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations."

This is not the first major government action with Chrysler. In 1980, U.S. President Jimmy Carter signed a bill providing Chrysler with more than $1 billion in loan guarantees.

Once again, the state of Michigan -- and in particular the Detroit area -- will be disproportionately hurt by the auto industry's woes.

"The industry's current crisis, with the potential for bankruptcy or consolidation, represents a fundamental shift in the state's economic base, rather than a simple cyclical downturn," Moody's said in a recent report.

"Bankruptcy is what they have been headed for in the past several months," said Mirko Mikelic, portfolio manager at Fifth Third Bank. "The biggest concern now is that the different stakeholders will be able to make the tough decisions they need to make.

Chrysler Chief Executive Robert Nardelli will leave the automaker following the emergence from bankruptcy. The U.S. government will place six members on the new company's board and Fiat will appoint three.

Investors reacted positively to the news. GM shares were up 6.6 percent and Ford Motor Co was up 7.2 percent in afternoon trading on the New York Stock Exchange.

FIAT: A DONE DEAL

The bankruptcy filing did not stall the Fiat deal.

Chrysler has been seeking a rescue deal from the Italian automaker while also trying to finalize its debt agreement.

The debt restructuring talks have been spearheaded by the Obama administration's autos task force and former investment banker Steve Rattner.

In a bid to win over three fund firms that had spurned an offer to accept $2 billion in cash in exchange for writing off all of Chrysler's $6.9 billion in secured debt, U.S. officials sweetened the terms by throwing in another $250 million, people familiar with those discussions said.

Chrysler, majority-owned by Cerberus Capital Group , has been among the car industry's laggards, but its plight reflects a slump in demand facing an industry whose $2.6 trillion annual revenue is equivalent to the GDP of France and which employs more than 9 million people.

HISTORY-MAKING

The bankruptcy marks a key moment for the automaker and for the struggling American manufacturing sector.

In 1925, Walter P. Chrysler established Chrysler Corp. Three years later, the company laid the cornerstone for the Chrysler Building, briefly the world's tallest building and still an unmistakable part of the Manhattan skyline.

(Reporting by Poornima Gupta and John Crawley, additional reporting by Kevin Krolicki, Soyoung Kim, David Bailey, Nick Carey, Jui Chakravorty, Jeff Mason and Giselda Vagnoni; writing by Jo Winterbottom and Patrick Fitzgibbons; Editing by Matthew Lewis)

[daves87rs]

interesting....

[Justin Bimmer]

Greed...

Free Market!

Capitalism!

No regulations!

[Justin Bimmer]

I wish AIG had been forced into bankruptcy...Ch7 though...let them die, and the leftovers be used to form smaller banks.

If AIG went, then tens of millions of people would have lost their retirement money.

The mistake was backing the paper on the insurance policies of these GAMBLES that all these bondholders have.

[Justin Bimmer]

Oh and another thing too. . .

Cerebus, the ass clowns who currently own Chrysler, have TONS and TONS of money on hand that they could be spending on Chrysler, but they are choosing to just let the company suffer instead.

[Teh Ricer Civic!]

Free Market!

Capitalism!

No regulations!

Hmm, we have somewhat free markets. We use a modified form of capitalism/socialism. We have a ton of regulations + underground regulations.

So... your arguing that because those 3 things dont work (which we dont have currently) we should move further in the direction that is already not working????

How about we get rid of the Federal reserve, fractional reserve banking, and bring back gold/silver backed currency?

As to Cerebus... i don't know what is going through their minds, it may be possible that they find it to be a better investment for them to just sell it off than to invest in it. Its kinda pointless to invest in an industry that you do not understand.

Edited April 30, 2009 by Teh Ricer Civic!

[A Horse With No Name]

Or the end of the current Cerebus phase and beginning of a new phase...

We can hope...I learned to drive in a Horizon, Chrysler made decent small cars back in the 80's and 90's...

Chris

[A Horse With No Name]

Hmm, we have somewhat free markets. We use a modified form of capitalism/socialism. We have a ton of regulations + underground regulations.

So... your arguing that because those 3 things dont work (which we dont have currently) we should move further in the direction that is already not working????

How about we get rid of the Federal reserve, fractional reserve banking, and bring back gold/silver backed currency?

As to Cerebus... i don't know what is going through their minds, it may be possible that they find it to be a better investment for them to just sell it off than to invest in it. Its kinda pointless to invest in an industry that you do not understand.

I am somehwat liberal, but I agree with you on the underground regulation thing. Industry needs regulation, but it should be an order of magnitude simpler than it is now.

Chris

[A Horse With No Name]

Oh and another thing too. . .

Cerebus, the ass clowns who currently own Chrysler, have TONS and TONS of money on hand that they could be spending on Chrysler, but they are choosing to just let the company suffer instead.

Tons of money that they SHOULD be spending on Chrysler, but they will let it die instead...

Chris

[CaddyXLR-V]

Cerberus is only allowed to invest a certain amount in each investment. They couldn't invest more even if they wanted to. Just like they wouldn't be allowed to invest 100% of their cash all in one stock, they can't invest 100% of their cash into Chrysler.

[A Horse With No Name]

40 hedge fund managers are sticking it to hundreds of thousands of Chrysler employees and retirees. Hedge funds are a cancer to this economy...we need to eliminate them like Europe is currently doing.

....couldn't agree more, 84.

Chris

[Chicagoland]

Chrysler simply kept making JUNK [before and after Daimler buy out] and believed they could keep getting away with it. The LX cars ended up being a fad, and the rest of the cars were utter crap, as if no one would notice?

Their only reliable cars are theirold designs, like K cars and minivans Any new designs still had bugs in them [Neon, and the horrid Sebring ], they used buyers as guinea pigs .

Edited May 1, 2009 by Chicagoland

[Teh Ricer Civic!]

Cerberus is only allowed to invest a certain amount in each investment. They couldn't invest more even if they wanted to. Just like they wouldn't be allowed to invest 100% of their cash all in one stock, they can't invest 100% of their cash into Chrysler.

Wait... Cerberus is structured like a venture capital fund?

Hmm... i wonder why they havent been looking for additional investors then?