Chrysler files for Chapter 11
"Chrysler LLC, the smallest of the Big Three U.S. automakers, filed today for bankruptcy protection in New York to streamline operations and shed debt in a reorganization that includes Italy’s Fiat SpA as a partner.
"The iconic automaker, which survived a near-death experience in 1979, missed a U.S. government deadline to come up with a restructuring plan by today that was rigorous enough to avoid bankruptcy and qualify for more bailout aid. The carmaker tried to negotiate an alliance with Fiat, reduce $6.9 billion in secured loans and cut $10.6 billion owed to a pension fund. Some lenders refused to slash the debt to $2.25 billion.
"The carmaker and the government plan to use the bankruptcy process to revitalize Chrysler by putting its best assets, such as its Jeep and Dodge Ram brands, in a new company that wouldn’t be burdened by current costs and debt. A slimmed-down version of Chrysler, armed with Fiat’s small-car technology, would emerge from such a process, giving the carmaker a “new lease on life,” U.S. President Barack Obama said today.
“Bankruptcy could do a lot of good for Chrysler” by allowing it to “shrink down to the size it needs” quickly, said Stephen Lubben, who teaches bankruptcy-law at Seton Hall University School of Law in Newark, New Jersey. “Fiat has shown that it knows how to turn around a troubled business.”
"Bankruptcy can involve uncertainty and delay. Dissident creditors intend to object to the company’s reorganization plan, a person familiar with their thinking said. That might thwart President Barack Obama’s goal of a “surgical” bankruptcy that would put a viable carmaker quickly into the market."
Now the question becomes: "What happens with GM." Various plans are under consideration there.