Chrysler to proceed with Chapter 11 bankruptcy

[Sudesh]

Source: http://money.cnn.com/2009/04/30/news/companies/chrysler_bankruptcy/index.htm?postversion=2009043009

Chrysler to file for bankruptcy
Some lenders refuse offer to reduce debt, leading to likely bankruptcy filing. But Chrysler expected to remain in business and complete deal with Fiat.
NEW YORK (CNNMoney.com) -- Chrysler LLC is going to file for bankruptcy, an administration official confirmed to CNN Thursday.
The filing comes after some of the company's smaller lenders refused a Treasury Department demand to reduce the amount of money the troubled automaker owed them.
Chrysler officials had no comment on the bankruptcy report. The company faces a Thursday deadline from the Treasury Department to reach deals with creditors who had loaned the company about $7 billion.
But the filing will not mean the halt of operations or liquidation for the troubled 85-year old automaker. Instead, the administration expects to use the bankruptcy process to join Chrysler with Italian automaker Fiat.
In addition, the United Auto Workers union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night.
President Obama said during a press conference Wednesday night that he was more confident than he had been 30 days ago that Chrysler would be able to emerge from the process as a healthy, competitive company. He is set to comment on the state of the auto industry at noon on Thursday.
The administration said Wednesday evening that talks with the smaller lenders broke down when they refused to meet a deadline set by the Treasury Department to accept pennies on the dollars they had loaned the company.
"After a month of tireless negotiations, the Administration went into yesterday afternoon with the full support of Chrysler's key stakeholders, including the [United Auto Workers union] and the largest creditors. That support remains," said an administration official.
Major banks such as Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) agreed to reduce their portion of $7 billion in secured loans to a more manageable $2.25 billion, according to the administration official. But some smaller lenders, including hedge funds, refused to accept the deal.
"The agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," said the administration official.
"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 added.
First Published: April 30, 2009: 9:11 AM ET

[AR]

Well maybe they will make a Viper than handles now that they are under the Fiat umbrella!

[Sudesh]

http://www.pistonheads.com/news/default.asp?storyId=19857

DODGE VIPER THE VICTIM OF CHAPTER 11?
Viper and Jeep Wrangler to be sold ahead of Fiat merger
The Dodge Viper may become an unexpected victim of the proposed tie-up between failing US giant Chrysler and its ambitious suitor Fiat.
The Viper brand, along with the Jeep Wrangler, are not thought to be part of the proposed rescue package that will exclude as many as eight US manufacturing facilities, including the Dodge Viper plant at Conner in Detroit.
The factory, which employs 115 staff, may however be sold off to help fund the re-emergent Chrysler brand. Rumours of a sale of the Viper brand and production facility have been rife since the company applied for government aid, but after details of the Chapter 11 bankruptcy agreement emerged last week it became clear that both the Viper name and Jeep’s Wrangler may not escape the auditor’s cut backs.
Chrysler has since gone on record to confirm that the company is willing to listen to offers for the Viper name: ‘Chrysler LLC is evaluating strategic alternatives for the Viper business including the potential sale of the Viper nameplate,’ a company representative said.
Given that the Viper brand was reportedly the target of several interested investment groups late last year it is likely it will successfully break away from Chrysler. However, within the dossier of Chapter 11 papers the Jeep Wrangler brand was identified as an element of the company that would require significant investment ‘in the range of $550 million to $1 billion’, casting doubt on the 22 year-old Wrangler brand’s future under Chrysler ownership.