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According to a story from The New York Times, the Treasury Department and Chrysler are readying Chapter 11 bankruptcy documents for filing as early as next week.

The report goes on to say that the filing carries with it an "agreement in principle" with the United Auto Workers that would protect members' benefits packages, including pension and retiree health care obligations.

Whither Fiat? Apparently, the Italian automaker is still very much in the picture, although under this arrangement, it would not reach its stake-holding deal until after Chrysler is already in bankruptcy court. The big outstanding question is where this leaves Chrysler's lenders, who are owed nearly $7 billion.

Some industry watchers are apparently wondering aloud if the bankruptcy filling preparation work is merely a ploy to turn the screws on lenders, who have balked at previous proposals designed to reduce Chrysler debt. More details at the link below.

UPDATE:
Chrysler's response to the NYT article is posted below the fold.

[The New York Times | Image: Bill Pugliano/Getty]

PRESS RELEASE

Chrysler LLC Response to New York Times Report

Auburn Hills, Mich., Apr 23, 2009 - "On March 30, the Administration recognized the viability of Chrysler LLC and its products, in combination with a Fiat alliance.
Chrysler has consistently said that its viability will be enhanced through an alliance with Fiat, as it represents a change in the Company's business model that expands its global competitiveness.
As we move forward in this process, we believe it's important to keep all options open. Chrysler will continue to work through the end of the month, based on the direction given by the Presidential Auto Task Force, to secure the support of the necessary stakeholders and reach a successful conclusion that the Administration and U.S. Treasury deems appropriate."


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  • 54 Comments
      • 6 Years Ago
      Hope they make it!!!
      • 6 Years Ago
      Taxpayer WILL get nailed even in a bankruptcy:

      From this article in the Detroit Free Press (http://www.freep.com/article/20090423/BUSINESS01/90423080/Report++Supporting+carmakers++pension+plans+could+strain+group):

      "The GAO report – which was a summary of government efforts to date toward automakers’ restructuring their operations – concluded that while it’s impossible to know what the exact claims would be if GM’s and Chrysler’s pension plans fell to PBGC, “doing so would likely strain PBGC’s resources because the automakers’ plans represent a significant portion of the benefits it insures.”

      Rep. Dave Camp, a Midland Republican, said if PBGC is pushed to insolvency, federal money will be required to stabilize it and protect others’ pensions.

      “This means that one bailout, which we have spent billions on initially, will have caused another,” he said, urging President Barack Obama to take bankruptcy off the table as an option for GM and Chrysler. "

      Great - I hope it happens. May then all the Internet keyboard jockeys who have been calling for the two Detroit automakers to file for bankruptcy can have fun complaining about yet another multi billion dollar bailout.
      • 6 Years Ago
      CNBC says administrations says no:

      http://www.cnbc.com//id/30374155
      • 6 Years Ago
      I KNEW this would happen. I KNEW we would give them billions of dollars, only to watch them STILL file for chapter 11. If we would have just let them go under from the beginning, it would have at least saved us a few billion dollars! This whole bailout nonsense just delayed the inevitable!
      • 6 Years Ago
      I blame the people at Chrysler who thought it was a cunning plan to bring aboard the idiot who ruined Home Depot, Bob Nardelli. Every one of those idiots should be fired, and wind up in the unemployment line. No severance packages.
      • 6 Years Ago
      Time to let the sinking ship sink!
      • 6 Years Ago
      Good night, sweet prince.
        • 6 Years Ago
        No product + financial games + "Americans cant live without me" + "we are proud we build the 300 to compete with Benz E" = As you brew,so you must drink = DEAD END
        • 6 Years Ago
        and nothing of value was lost.
      • 6 Years Ago
      Ch-11 bankruptcy preparation is "standard procedure" at this phase for Chrysler.

      The sr. debt (bond) holders will get first dibs on assets to be sold - plants, equipment, inventory, etc. Fiat will come in late and pick-up what ever pcs of Chrysler it wants and the rest is scrap! Employees and retirees beware, your benefits (pension, retirement, healthcare) are NOT fully protected!

      The only things worth saving - Jeep, Ram trucks, Hemi V8, maybe the new Pentastar V6, minivan? and thats about it, there cars are junk!

      Ford sales should see a nice increase in the coming months - Buy Ford(F)!
      • 6 Years Ago
      (making surprise face)
      • 6 Years Ago
      "The report goes on to say that the filing carries with it an "agreement in principle" with the United Auto Workers that would protect members' benefits packages, including pension and retiree health care obligations."

      WTF!! The biggest benifit to a bankrupcy is to rid the company of these bloodsuckers!!! A bankrupcy should mean immediate termination of all union contracts and any relationships between the company and the UAW. Without that, why bother. This company can never soar with the 500,000 lb anchor of the UAW weighing it down. So frustrating! F the union!
        • 6 Years Ago
        @paul34 -

        You're in no position to judge who is drinking what Kool-Aid, unless you have lived in Europe and have first hand knowledge of what their systems are like for the every day working stiff, blue or white collar.

        I have a close relative, a cousin, born here like me, who moved to Europe ten years ago. Like me, he's pushing fifty. He'd like to consider moving back, to be near his siblings who have started families (and enjoy being the Uncle who's the bad influence, but that's another story). He won't consider it, given the anise free market, employer based health insurance system.

        The bullsh*t horror stories about European style national health care is just that - bullsh*t. Another family member born here moved back to Europe when my Aunt and Uncle were relocated by my Uncle's employer back to Europe. He grew up to go to college, and medical school, passed his boards and became an M.D., a family medicine general practitioner - with ZERO debt. The whole bill paid by the government, including a monthly stipend so he wouldn't even need a part time job for spending money -that's right sports fans, he got PAID to go to school. He drives a 5 Series BMW, gee whiz, like doctors here do, has a nice, 2500 square foot apartment that's fully paid for, and as European tradition would have it, now with nearly ten years seniority, he has eight weeks a year vacation. When he gets to fifteen years seniority, that annual vacation jumps to twelve weeks. The hospital his clinic is located in is state-of-the-art. The stories of waiting lists for certain procedures is, in reality, no worse than a U.S. PPO does, and far less than most U.S. HMO's.

        The only liars disputing these truths are political conservatives who have an ideological axe to grind. That ideology has zero validity. Educate yourself, and don't be anyone's political patsy. Neither the far left nor the far right has a monopoly on the truth. The Reagan era free market, trickle down bullsh*t has been discredited.
        • 6 Years Ago
        And who's going to take over the pension funds and health care? Ow, that's right, screw the old people, let them live the rest of their live in poverty and misery after tooling on pieces at a car plant for 45 years.

        Easy for you to say probably. Let me guess, you're in a white collar job somewhere, as are all the people around you. Screw the plebs.

        That's never gonna fly, and guess who will take over these funds? That's right, your federal government. So Chrysler can turn away from their responsabilities and let the government clean up afterwards. Cowards... (and no, i'm not a blue collar worker and have no ties to unions, but I support them. Go on, moderate my comment, that's what usually happens)

        That's why pensions should be provided by the state (and healthcare) Instead of paying a part of your salary to company X to provide your pension, you pay a part of your salary in taxes to the government. It's exactly the same thing, I don't see what all the fuss is about. It works fine over here. People work for 45 years, and get a pension no matter what. If their company survives or not, doesn't matter.

        People don't care about the specifics of capitalism and the experiments in the financial system, they want stability and a decent life for a life worth of hard labour.

        Trusting PRIVATE companies with healthcare or pensions, the way you would with your car insurance is borderline criminal. Your car insurance company will try everything not to pay up. Private health insurance works the same way, but then you're negotiating human life and general welfare. Trying to deny you payment because of ridiculous preconditions because private companies need to make money. Government has no commercial interests, if anything they could do this more efficiently...

        But hey, whatever you like best. You're all very lucky that your citizens just keep swallowing it, because raising your voice means you're not a patriot :) Easiest argument ever, what a blessing.
        • 6 Years Ago
        @ eu_reader:

        Did you seriously just say government would be "more efficient" than private industry? That government is not bureaucratic at all managing things like healthcare? I have a hard time you live in any country which provides social services like that; or maybe you just don't have any private experience to compare it to. Private health insurance is a beech to be sure; but not sure where you get the idea that 100% government managed healthcare is necessarily any better.

        I'm sorry that you drink so much Kool-Aid.
        • 6 Years Ago
        And you're just plain stupid. Your irrational hatred for blue collar unions blinds you to reality. Ridding the company of those expenses means huge bills for the taxpayers. The Pension Benefit Guarantee Corporation is already twenty-three billion in the hole. Add GM or Chrysler's pensions to the list, and the PBGC goes bust. Not my word on that - the GAO's report released TODAY said “doing so would likely strain PBGC’s resources because the automakers’ plans represent a significant portion of the benefits it insures.” (http://www.freep.com/article/20090423/BUSINESS01/90423080/Report++Supporting+carmakers++pension+plans+could+strain+group). Add to that that costing the retirees their health coverage, which happens to be just Medigap insurance, means dumping more costs on the local care systems in the communities those retirees. Furthermore, suddenly forcing retirees on fixed incomes to assume more medical costs means more money taken out of the local economies, adding more reasons for a deepening and prolonged recession.
      • 6 Years Ago
      Quite possibly, Ian.

      Some of you folks seem to be confusing reorganization under bankruptcy and liquidation.

      Chrysler, if this is done properly, will emerge lean and efficient...well leanER at least...however non-critical suppliers are in for a bumpy ride under chap 11. 90 day give-back comes to mind immediately...ouch!
      • 6 Years Ago
      Result of Chrysler liquidation auction.

      Dodge : Nissan(Eying the truck biz)
      Chrysler : Fiat(Still getting Chrysler one way or another)
      Jeep : Hyundai(Hyundai builds Jeep chassis as subcontractor and stands to lose the most if Jeep falls into another automaker's hand)
        • 6 Years Ago
        Renault-Nissan is under same financial troubles that the WHOLE auto industry is experiencing.... Nissan is not exactly all HOT to expand into a shrinking N/A truck market (big idea:)

        Fiat is buying into CHRYSLER the company... not the pathetic "luxury" brand!

        Care to source what Jeep product Hyundai produces as a "sub-contractor"???

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