📰 Auto News Chrysler to officially file for Bankruptcy

[Spicy McHaggiz]

http://www.foxnews.com/politics/2009/04/30/chrysler-filing-bankruptcy-official-says/

Chrysler plans to file for Chapter 11 bankruptcy, a White House official confirmed Thursday.
Chrysler faced a Thursday deadline to produce a restructuring plan, but the automaker's creditors reportedly declined an offer Wednesday from the Treasury Department that would give the lenders $2.25 billion in exchange for forgiving Chrysler's $6.9 billion debt.
The official, while criticizing Chrysler's creditors for their actions in the negotiations, disputed reports that talks between them and the automaker broke down.
"Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders, nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward," the official said.
The official said that after a month of "tireless negotiations," the administration had the "full support" of Chrysler's largest creditors and the autoworkers union as of Wednesday afternoon.
"That support remains," the official said.
Bankruptcy doesn't mean the nation's third largest automaker will shut down. And Chrysler is expected to sign a partnership with the Italian company Fiat as early as Thursday as part of its restructuring plan.
Meanwhile, President Obama plans to talk about Chrysler and the U.S. auto industry at noon, as Chrysler LLC nears its one-minute-before-midnight deadline to have deals in place with labor, creditors and Italian automaker Fiat.
As for General Motors Corp., its bondholders want a majority stake in the restructured automaker in exchange for forgiving their claim to $27 billion of the company's debt. GM has come out with a plan that would give the U.S. government a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
FOX News' Mike Emanuel and the Associated Press contributed to this report.

Side note, amazing how the White House says this, more over stepping of authority?

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[PANDA]

I thought they have till midnight tonight to say for sure?

 

[Spicy McHaggiz]

Theres supposed to be a press conference within a few hours I heard. But its pretty imminent.

 

[Smoke]

To be fair,had the White House not intervened both companies would be closing up shop by now.Some would argue that that's the way things should be.IMO, if this buys more time for the guys and gals on the bottom to seek better jobs I'm okay with 'white house' intervention.

 

[Mickey]

Go Ford.

 

[Mook]

and here we are

President Obama announced moments ago Chrysler will officially file for a "quick" Chapter 11 bankruptcy protection under United States Code in New York bankruptcy court later today, then partner with Fiat. Here's what happens next.

After months of hanging by a federal loan lifeline, Chrysler will officially file for bankruptcy protection today. As many are aware, bankruptcy in the United States is permitted by the United States Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Congress has exercised this authority several times since 1801, most recently by adopting the Bankruptcy Reform Act of 1978, codified in Title 11 of the United States Code, commonly referred to as the Bankruptcy Code.

What the federal government is hoping for — in it's happiest-of-happy-thoughts scenarios — is a quick "surgical" bankruptcy of only 30-60 days with Fiat swooping in to pick up the pieces of a tarnished and broken Chrysler, helping them to right the company with an injection of $3.5 billion in DIP (Debtor-In-Possession) financing — a special form of financing provided for companies in financial distress or under Chapter 11 bankruptcy process that allows the company to operate as it sheds contracts. Then the Feds will give $4 billion in "exit financing." First to go will be legions of dealer contracts that will be shed like so much dead skin off a snake. The UAW has already agreed to certain cuts in their 1997 contract that should take care of their needs.

That relatively rosy scenario can be broken up at any time if one of thekey stakeholders — a few bondholders for instance or one of the major Tier One suppliers — decide to stall the process out of a desire to get a better deal than the one being pushed by President Obama's auto task force and Treasury Dept. However, despite President Obama not "standing with these minority stakeholders," under the federal bankruptcy code, companies need only a majority of a creditor class - defined as two-thirds of the dollar amount of that class of debt, and more than 50 percent of the holders of that class - to agree to a reorganization's terms to foist that plan upon holdouts. That standard is lower than the almost complete acceptance usually required for an out-of-court debt restructuring to succeed.

Additionally, Chrysler Financial will no longer be offering lending for Chrysler vehicle purchases. Instead, GMAC (owned by Cerberus, Chrysler's master-for-the-moment) will step in to the breach.

 

[Freebeer187]

no more dodge SRT-10's

 

[Smoke]

no more dodge SRT-10's

Actually,they'll be making SRT10s during the BK process.All that this announcement means is that Chrysler is reorganizing,not liquidating.

 

[Freebeer187]

ohhh i thought they were going bye bye.

 

[Poopshinanigans]

Actually,they'll be making SRT10s during the BK process.All that this announcement means is that Chrysler is reorganizing,not liquidating.

I thought it said that all production will stop during this process? And also, its about fucking time. Chrysler needs this structural enema badly.

 

[Mook]

see below for a quick rundown

• Blame it on the creditors – President Obama cited Chrysler's creditors' refusal to accept a debt-for-equity swap as the main reason filing for Chapter 11 was the only option left.
  
• Chrysler divided – 55% will be owned by the Voluntary Employee Beneficiary Association (VEBA), 10% shared proportionally between U.S. and Canadian governments, 20% owned by Fiat.
  
• Fiat's got goals – Remaining 15% of company will be distributed to Fiat in three 5% increments for meeting the following goals: creating U.S.-built 40-mpg vehicle platform, providing a U.S.-built fuel-efficient engine family and giving Chrysler access to global distribution network.
  
• Nardelli nixed – Current Chrysler CEO Robert Nardelli will leave after the alliance with Fiat is completed and the company emerges from bankruptcy, though he has stated that he was not asked to leave.
  
• GMAC gets the job – Chrysler Financial has been replaced by GMAC as Chrysler's preferred lender for wholesale and retail transactions.
  
• In-and-Out – Chrysler and the U.S. Auto Task Force estimate the company will emerge from bankruptcy in 30 to 60 days.
  
• Dealerships to be cut -- No surprise, but Chrysler's dealer network will be cut down as part of the restructuring. No hard numbers are available yet, but expect details to follow in the next 24 hours.
  
• Business as usual – Chrysler will largely run as normal in the interim, being funded by government-backed debtor-in-possession financing; warranties will be honored, suppliers paid and dealers supplied with inventory, but no new vehicles will be built until bankruptcy terms are finalized.

 

[SRT41320]

GET RID OF THE LAZY ASS UNION WORKERS!

 

[Spicy McHaggiz]

10% owned by Government, why do I have a feeling it will mean 60% government control?

 

[Bob Kazamakis]

will you shut the hell up already ^

all you do is fucking bitch about the government every damn post.....try something new like the swine flu.

 

[Smoke]

Damn,that's pretty bad when you shut down production cold and STILL can supply inventory to dealers with no interruption.

I guess they won't be making SRT10s after all.

 

[Spicy McHaggiz]

will you shut the hell up already ^

all you do is fucking bitch about the government every damn post.....try something new like the swine flu.

 

[asainchris]

10% owned by Government, why do I have a feeling it will mean 60% swine flu.

fixed haha

 

[Spicy McHaggiz]

That Swine Flu is a bitch!

 

[Mook]

.

Now that the court documents have officially been filed, details regarding Chrysler's ongoing plans to stay in business are becoming a bit less muddy. Two corporations will be created from the dying automaker: a so-called "OldCo" with unwanted bits and liabilities that seem likely to die a slow and painful death through the automaker's Chapter 11 filing, and a "NewCo" that contains the best that the ailing automaker has to offer.

Tellingly, lumped in with the OldCo legal entity are eight plants that now seem likely to be closed down entirely. In addition to plants in south St. Louis, Missouri and Newark, Deleware that are already idle, the following 6 North American plants are in danger:

* Sterling Heights (Mich.) Assembly Plant
* Detroit (Mich.) Axle
* Conner Avenue (Detroit) Assembly
* St. Louis (Mo.) North Plant
* Kenosha (Wisc.) Engine
* Twinsburg (Ohio) Stamping Plant

These plants are all scheduled to be shut down by December of 2010. Considering that the assembly plant in Sterling Heights is the only location building the Chrysler Sebring and Dodge Avenger, these two unloved mid-size sedans appear to be on the chopping block. Further, the Connor Avenue Assembly plant is where Dodge builds the Viper, so unless a new knight in shining armor shows up to take the supercar operations off Chrysler's hands, that may be all she wrote for the V10-powered behemoth.

 

[Mook]

.

Remember last week when President Obama said that the Chrysler bankruptcy would be "fast and efficient"?

So much for that idea. The Detroit Free Press is reporting that the proceedings have already been delayed by the bankruptcy judge. Turns out Chrysler was supposed to submit its plan to the court on Friday but only managed to get it in last night.

The holdout investors, otherwise known as the evil hedge funds, called BS and the judge agreed. The investors also asked that the judge keep their identities secret as those that were already identified have received death threats.

 

[Poopshinanigans]

Jesus Christ. I love the way the system works. Does that "right to a speedy trial" thingy apply here even though its not a trial?

 

[slow sebring]

GET RID OF THE LAZY ASS UNION WORKERS!

yes! this

 

[Mook]

Long before factors like bankruptcy and Fiat's involvement, Chrysler was looking to offload the Viper line. Several potential buyers were reportedly being considered, but months down the line no deal has been announced. In the meantime, of course, Chrysler has announced it will be filing Chapter 11 before restructuring in a new partnership with Fiat. But what of the Viper at this point?

According to emerging reports, it could face the axe. Chrysler says it is still considering offers on the Viper line, but an in-depth analysis of the company's restructuring strategy suggests that the Viper would fall into "OldCo", the term applied to Chrysler's liabilities and bad assets that will be shed during the bankruptcy process. The Conner Avenue Assembly plant where 115 workers build the Viper is one of several earmarked for potential closure, along with Chrysler's facilities in Newark, Twinsburg, Kenosha, two plants in St. Louis and the Detroit Axle factory. Although the Viper is an entirely different beast to the exotica built by Fiat subsidiary Ferrari, considering what the Dodge supercar represents, we couldn't imagine Fiat being too eager to keep the Viper alive.

The Viper isn't the only Chrysler product at risk, however, as several trucks – including the Dodge Ram, Dakota and Jeep Wrangler, believe it or not – could also be shed as Chrysler aims to streamline.

[Autoblog, InsideLine]

 

[Mook]

.

Think Fiat's getting a pretty sweet deal with Chrysler? The Italian automaker is, after all, gaining a 20% stake in the troubled American automaker, plus local manufacturing capacity and access to its dealer networks, all without paying a thin dime. Not a bad deal, but Chrysler's hard at work trying to make it sweeter. Emerging reports suggest that if the deal between Fiat and Chrysler were to fall apart, Chrysler would be obligated to pay Fiat $35 million in severance fees.

Chrysler is currently pursuing the clause in the courts administering its bankruptcy protection. The reasoning is that Fiat has put in the time and money into pursuing the partnership that would allow Chrysler to continue operating, and if the courts – or anyone else, for that matter – were to terminate the arrangement, Fiat would deserve compensation. A similar clause worked out well for Fiat after its partnership with General Motors was terminated. The tables now turned, Fiat has certainly come a long way since then.

 

[Poopshinanigans]

I want to see ferrari work its magic on the vipers V-10.