Chrysler hires bankruptcy lawyers... you know, just in case
The Wall Street Journal is reporting that Chrysler LLC has retained the services of law firm Jones Day, which specializes in representing companies as they go through the process of filing for Chapter 11 bankruptcy. Chrysler reportedly hired the law firm several weeks ago, anticipating that its counsel may be required if the $7 billion in government bridge loans it has requested are not approved before the end of the year. Sources say that Corrine Ball is the lawyer tasked with handling Chrysler's situation should bankruptcy remain the only option. She has worked on the Dana Corp. bankruptcy, several UAW cases and represented General Motors in its acquisition of Daewoo. While Chrysler hopes that new testimony hearings this week in front of both the Senate and House of Representatives leads to approval of its request for aid, politicians repeatedly grilled CEO Bob Nardellli on why the automaker's owner, private equity firm Cerberus Capital Management, can't save Chrysler with its own money. The retention of bankruptcy counsel, however, suggests that Cerberus is perfectly willing to let Chrysler enter Chapter 11 bankruptcy rather than infuse it with more of its own cash.
[Source: Wall Street Journal, sub. req'd]
Reader Comments (Page 1 of 2)
Red 2:44PM (12/05/2008)
I'm about 99% sure they're going to get the bailout. Seems things are going far better today than before. Now they just need to figure out how to actually do it. I still think they need to unwind GM, Chrysler and Ford as much as possible out of certain legislation and certain scenarios so should they still fail after a cash injection, the rest of the country isn't held completely hostage.
That said, I'm not entirely sure how they'd do that either, with exception to seperating their financing from their manufacturing.
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Auari 2:45PM (12/05/2008)
I hope they don't get the bail out. They want 7 billion dollars just to stay alive long enough for someone to buy them out, so y in the world would congress approve that?
on the other hand I do hope ford and or GM the money.
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MastrCake 2:48PM (12/05/2008)
You know what? I could probably live without Chrysler, llc. I think they have made too many mistakes in the past, and they really don't make good enough cars IMHO.
MastrCake 2:46PM (12/05/2008)
If the Detroit 3 don't get the bailout money, it could spell trouble for the entire auto industry. If they chose bankruptcy, it could mean worse cars (i.e. GM's cost cutting department in full force), which means nobody would buy them, which would mark the end of the American car. And we don't want that, do we congress?
I am fully for the bailout, and if congress doesn't approve, we should protest in Washington! Who's with me!?!?!?!?
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CARGOD 2:52PM (12/05/2008)
LOOK, SOMEONE NEEDS TO GO AND THAT IS CHRYSLER. THERE IS NOT ENOUGH BUSINESS TO GO AROUND AND THEY ARE PRIVATE NOT PUBLIC. IF THERE PARTNERS WONT LOAN THEM THE MONEY WHY SHOULD THE GOVT..BACK TO THE WOODSHED FOR NARDELLI..
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Rainy99 3:19PM (12/05/2008)
We hear you loud and clear. [capslock]off[/capslock]
jamie 4:00PM (12/05/2008)
Not enough business to go around???
Well, Chrysler was the #4 auto manufacturer with 1,885,227 vehicles sold last year (2007). I suppose there is no room for all the rest then who sold fewer vehicles than Chrysler, like Honda, Nissan, Hyundai, Mazda, Mitsubishi, Kia, Suburu, Suzuki, Saab, Volvo, Volkswagen, Audi, Porsche, Mercedes-Benz, BMW, Isuzu, Jaguar, Land Rover, Mini, Ferrari, Maserati, Bentley, Rolls Royce, Maybach.
BigMcLargeHuge 4:51PM (12/05/2008)
Where's Isuzu on your list? Diahatsu?
Alfa-Romeo?
Oh right, they're gone.
And things are really not looking good for Mitsubishi in the United States. Unless somebody bails them.
Its a dog-eat-dog world. No, there literally isn't enough business to go around for all brands forever.
But that doesn't mean that Chrysler llc. is going to 'fail'. Its just a matter that not all of the dozens of brands (foreign or domestic) can have enough of the pie and still be unique.
Bankruptcy protection is not when you give up and die. They have a law office now to fend off any hard feelings from groups that will inevitably need to be laid off. The domestic industry is too big for its demand.
If Jeep and Dodge are the only survivors, so be it. They'll shrink. Very unlikely to die.
BigMcLargeHuge 5:02PM (12/05/2008)
Sorry, I see Isuzu.
They belong in the dying pile, not completely dead.
iQuack 2:53PM (12/05/2008)
Pathetic watching these car dudes begging for a taxpayer lifeline. Their industry has been a slow motion train wreck for 35 years, but none of the CEOs running these companies had the smarts to see what was happening around them.
As for Chrysler, that dog is owned by a private investor group (Cerberus--the 3-headed dog, no less) and it's worthies just want to build up Chrysler so they can sell it for a fat profit. Why bail THEM out?
Now it's all about saving UAW jobs........saving the jobs of greedy, union creeps who caused much of the problem threatening to strike if they weren't overpaid.
Shouldn't crappy companies and their enablers have the right to fail?
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jamie 4:14PM (12/05/2008)
I don't think Chrysler will exactly what they're asking for. More than likely a "shot-gun" marriage will be arranged with GM. The marriage will be a tenuous one being more of an alliance rather than a merger with GM calling the shots and Congress watching overhead.
Chrysler could re-emerge again as an independent company from its "conservatorship" once certain goals have been met. This would probably include a stronger alliance with Renault-Nissan in the near future.
The prospects of letting Chrysler fail would only exasperate an already desperate situation. 55,000 employees would lose their jobs. This would then extend to the auto manufacturer's supplier base and force Ford to tap into its proposed $9 billion Federal line of credit. The cycle would repeat itself with only greater harm endangering the entire U.S. economy. GM would unquestionably file for bankruptcy at this point.
The unraveling must be stopped before the end of the first quarter 2009, or the recession will undoubtedly turn into a long depression.
Ben 2:56PM (12/05/2008)
Listening to the C-Span radio - they just asked why Cerberus spent $7-billion for Chrysler, and is now asking for the same amount.
I think Chrysler will be dead - not the other two.
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WeSeed Writer 3:01PM (12/05/2008)
I wonder how much it'll cost them to retain their services...if this becomes a big deal they may wind up driving their hybrids to a public defender's office.
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kevinhooker1 3:07PM (12/05/2008)
I think Chrysler should die as well. They make no real relevent products. (Sebring/Avenger twins). They say they are in the process of making a turnaround in 2009 with the 2010 models but has anyone seen any spy shots? Nope.
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Frank 3:37PM (12/05/2008)
I have. go to www.allpar.com
Bill Cosworth 5:27PM (12/05/2008)
GO GM
I hope they get there money. I love my GM cars.
Here is something funny.
Volt Races Prius in washington.
Volt wins!!
http://gm-volt.com/2008/12/05/volt-one-step-ahead-of-the-prius/
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Bill Cosworth 5:27PM (12/05/2008)
http://gm-volt.com/2008/12/05/volt-one-step-ahead-of-the-prius/
Volt races PRius and Volt wins
GO GM
I hope GM makes it. I want to get the New Chevy Camero or Ford mustang.
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Richard 3:16PM (12/05/2008)
Chapter 11 would be good.
Chapter 11 doesn't mean they are out of business. It gives them an opportunity to restructure their debt load and their company for success in the future. Ask any airline magnate you may know.
Of course, being owned by - evidently - cash-rich Cerberus and having that company decline to pump in the needed cash, probably makes Chrysler's TARP or Chapter 11 opportunities somewhat diminished. Truth be told, Cerberus probably bought MOPAR for the liquidation assets. They are just trying to find a palpable way to get to that.
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Rainy99 3:23PM (12/05/2008)
I am starting to lean in the direction of bailing out GM, with restrictions, letting Chrysler go into Chapter 11, and letting Ford be and coming back to them if need be. (Ford is there just to secure a loan if one or both go belly up).
I am also starting to agree with some of the lawmakers comments that Financial Institutions are getting loans/cash left and right without the scrutiny that the auto industry is. Is the credit market opening up? Doesn't seem like it.
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dm00012 3:29PM (12/05/2008)
Seems like everyone is for the death of Chrysler. I for one think Chrysler should stay. I see them as an automaker with great potential and no other automaker is as innovative as Chrysler. The only reason Chrysler is in the shape it is now is because of Daimler. Chrysler should not die due to the greed of the Germans.
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