Chrysler’s bankruptcy imminent

Article by Christian A., on August 29, 2010

Chrysler can't come up with an agreement with other creditors to trim down its debt even though it has struck a deal with a few major creditors. Chrysler may be forced to file for bankruptcy as early as tomorrow as a result of their hesitation.

A number of creditors came to terms with Chrysler to accept $2 billion in cash in place of the $4.83 billion the carmaker is responsible for.

Those with connection to the balance of $2.07 billion are not willing to agree to a lowered payment or a debt-for-equity exchange, casting considerable doubt on the carmaker's future and the stalling merger with Fiat.

It has been suggested that Chrysler will file for bankruptcy in the Southern District of New York, a court well-known for its aptitude in settling intricate asset-sale transactions. If this filing pushes through, then a restructured Chrysler would only carry good assets and brands and would eventually become US Treasury property.

There is speculation that the US Treasury would utilize the $4 billion aid it offered to Chrysler as leverage, together with a likelihood of further purchase of debt or equity, to acquire these assets.

Referred to as surgical bankruptcy, it will create a reformed Chrysler in as little as 30 days after filing. Likely to remain in bankruptcy for a prolonged period of time are bad assets, including some dealer agreements and other debts, which will be eventually sold off in time.

Topics: chrysler, bankruptcy

If you liked the article, share on:

Comments

Recommended

A few months ago, Mercedes-Benz promised that they will be treating everyone to a “big surprise” during the Monterey Car Week. And true enough, many of us were stunned as...
by - August 19, 2017
McLaren has already shown some interest in electrifying their models. And initially, we thought that they will just use hybrid systems to use across their current lineup. Nevertheless, we have...
by - August 19, 2017
Fifty years after its glorious victory at the 24 Hours of Le Mans, Ford launches the 2018 Ford GT ’67 Heritage Edition at the 2017 Monterey Car Week. The red...
by - August 18, 2017
Hyundai has recently unveiled an unnamed pre-production model of its new fuel cell SUV. We don’t know what to call this model just yet, but sources say that this model...
by - August 18, 2017
This weekend at the 2017 Pebble Beach Concours d’Elegance, the BMW Z4 Concept will make its first public appearance. The good news is that we will finally have a real...
by - August 18, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries