Chrysler To File For Bankruptcy
Bankruptcy
Storied Detroit automaker Chrysler will file for bankruptcy in New York court almost immediately, senior administration officials said Thursday.
"We worked very hard to keep this company out of bankruptcy," one official said on a conference call with reporters. However, not all of Chrysler's secured creditors were on board with the agreement. "With reluctance, we've made the decision to go through with this surgical bankruptcy process."
Under the terms of the arrangement, Chrysler will be placed in a "quick rinse" bankruptcy, which officials expect to last about 30 to 60 days. The government will provide $3 billion to $3.5 billion so-called "debtor in possession" financing to keep the company running, and another $4.5 billion in exit financing. In addition, the Canadian government will provide $1 for every $3 of U.S. taxpayer money on the line.
The government is also replacing Chrysler's board, but it is not yet clear who the replacements will be. Officials said Chrysler Financial, the company's captive financing arm, didn't have the resources to support a restructuring. Instead, GMAC will be the company's new financing source, with support from the U.S. government. Italian automaker Fiat will engage in a partnership agreement with the company.
Fiat's stake would initially be 20%, but it could increase, in 5% increments, as it meets three government thresholds: helping Chrysler establish a distribution network outside of North America, building a fuel-efficient engine in a Chrysler U.S. Factory, and building a small car in a U.S. Factory. Once taxpayers are repaid, Fiat could boost its stake above 50%.
Related listings
-
Wamu Sues jpmorgan to Recover $4 Billion in Deposits
Bankruptcy 04/29/2009Lawyers for Washington Mutual Inc. have filed a bankruptcy court complaint against JPMorgan Chase & Co. over some $4 billion in disputed assets. Seattle-based WaMu, which filed for Chapter 11 reorganization along with its Washington Mutual Invest...
-
Investors take Madoff to bankruptcy court
Bankruptcy 04/14/2009A small group of investors took Bernard Madoff to bankruptcy court on Monday, saying the disgraced financier bilked them out of nearly $64 million. A Manhattan judge cleared the way for the newly filed Chapter 7 petition last week by granting a reque...
-
Vick to make first court appearance in bankruptcy
Bankruptcy 04/02/2009A judge wants to know more about suspended NFL star Michael Vick's bankruptcy plan, which is based on his goal of resuming his football career when he gets out of jail. Vick is scheduled to make his first personal appearance in a Virginia bankruptcy ...
New York Commercial Litigation Law Firm - Woods Lonergan PLLC
Founded in 1993 by Managing Partner James F. Woods, Woods Lonergan PLLC has built a strong reputation as a resourceful and industrious firm that provides clients with clear, concise, and straightforward answers to their most challenging legal issues. Partner Lawrence R. Lonergan, who joined the firm in 2008, has been a friend and colleague to Mr. Woods for over 40 years and shares the same business philosophy. Woods Lonergan PLLC’s collective experience and expertise enables the firm to expeditiously and effectively analyze the increasing challenges clients face in an evolving business and legal world, in many instances, avoiding unnecessary time and expense to our clients. Our mission is simple: provide cutting-edge expertise and sound advice in select areas of the law for corporate and business clients. We thrive on providing each client with personalized attention, forceful representation, and a collaborative team effort that embraces collective knowledge.