Rumormill: Obama to Announce Chrysler Bankruptcy Tomorrow!

[stevento]

Autoblog link. (http://www.autoblog.com/2009/04/29/report-obama-planning-to-announce-chrysler-bankruptcy-tomorrow/)
Autoblog not a strong enough source for you?
Try bloomberg.com (http://www.bloomberg.com/apps/news?pid=20601103&sid=aRhqp0MPGb24&refer=news) or the Wall Stree Journal. (http://online.wsj.com/article/SB124052424835850015.html)

A Chrysler bankruptcy filing, while long expected by some, would nonetheless represent a watershed moment in Detroit's long decline as the first such move among the once-dominant Big Three auto makers. GM is working through similar issues and could be forced to file for bankruptcy in May.
This may void UAW contracts. Discuss.

[leekohler]

That's too bad. I hope Chrysler can find a way to reorganize and survive. I've owned three Chryslers and they were all beautiful and great cars.

[MacNut]

I see Jeep and Dodge splitting off.

[freeny]

This would never happen if we were truly Socialist ;)

[obeygiant]

Chrysler needs to hit the fail button. press here! (http://www.pacdudegames.com/fail/)

I've owned a 1983 Chrysler New Yorker, that talked!

and a Chrysler Pacifica and a Town and Country.

Anyway I though that they were just about to sign a deal with Fiat.

DETROIT — Italian automaker Fiat Group SpA will sign a partnership agreement with Chrysler LLC by Thursday as negotiations continue to keep the struggling automaker alive without filing for bankruptcy protection, according to three people briefed on the deal.
One thing is certain: Chrysler will not be sold off in pieces, according to another person briefed on the fast-moving talks.
The Fiat partnership is the last piece of a huge restructuring plan needed for Chrysler to continue operations as it approaches Thursday's government deadline to cut labor costs, slash debt and take on a partner.
But it was unclear Wednesday whether the struggling Auburn Hills, Mich., automaker will be able to stay out of bankruptcy court. That, according to the people, hinges on whether a group of hedge funds that hold 30 percent of its debt agree to forgive most of what they're owed.

[Galley]

USA Today is reporting that the Fiat partnership will be announced on Thursday.
http://www.usatoday.com/money/autos/2009-04-29-fiat-chrysler_N.htm?csp=34

[SLC Flyfishing]

I'm not a Chrysler fan anyway. Let em die!

All the Chrysler corporation vehicles I've ever had the misfortune of driving were absolute bombs. Even the post 87 Jeeps!

I had an 85 Jeep CJ7 that was awesome, but that was manufactured under the AMC corporation and was solid as a rock both on road and off. As soon as Chrysler bought the Jeep brand, all the subsequent models were effectively neutered, watered down versions of the older ones.

SLC

[stevento]

I'm really not a fan of Chrysler either. Their current product line just does not seem to be competitive with GM and Ford. But they can't die. If you were from Detroit, you'd know the economy there is far beyond a recession. I don't think I'd go as far as to say it's a depression, but "recession" is a drastic understatement for the Detroit area.
GM will close nearly all it's plants for 9 weeks this summer. That means Delphi and other GM suppliers are going to take a nasty hit as well.

[Sun Baked]

I bet the bondholders are glad they didn't swap the debt for stock and get wiped out.

Chrysler was offering a pittance compared to the secured creditors that manager to garner a large share of past bankruptcies.

Though the balance between covering the bondholders and the workers (and that block of pension holdings) should be interesting.

The fight could really get ugly.

[Zombie Acorn]

Obama gave a lashing to hedge funds today for not taking a horrible deal. under bankruptcy law they are first in line so I can't say I blame them.

[stevento]

Chrysler closing plants left and right. (http://www.autoblog.com/2009/05/01/eight-plants-to-close-under-chrysler-bankruptcy/)

3 plants on the chopping block are in Detroit area.

[MikeTheC]

So, my question in all of this is did Bob Nardelli get another golden parachute to leave Chrysler, or was Home Depot the only company actually stupid enough to have paid him $190M in stock options plus $20 million in cash to leave Home Depot?

And also I want to know if anyone else out there in Corporate America-ville has finally learned that you shouldn't hire Bob Nardelli unless you want him to kill your company?!?

Just askin'...

[Dont Hurt Me]

Charger, Challenger. Both awesome. Its a shame that management thats worthless and overpaid unions have put this company in this pickle. Get rid of the union and find a automotive lover to run the company and it will thrive.

[adroit]

Charger, Challenger. Both awesome. . . .

Really? Are you serious? The Charger is quite possibly THE worst car I have ever driven. And I've driven some real heaps!

I haven't driven the challenger but the new Charger is indicative with what is wrong with Chrysler. No imagination, no performance, no quality, no care.

[Dont Hurt Me]

Really? Are you serious? The Charger is quite possibly THE worst car I have ever driven. And I've driven some real heaps!

I haven't driven the challenger but the new Charger is indicative with what is wrong with Chrysler. No imagination, no performance, no quality, no care.No performance? thats funny. I love my Charger. Quiet,Fast.Powerful,Comfortable,Smooth ride,Cool Looking, Awesome Stereo, and you can get fantastic deals on them.:p I love it.

[leekohler]

No performance? thats funny. I love my Charger. Quiet,Fast.Powerful,Comfortable,Smooth ride,Cool Looking, Awesome Stereo, and you can get fantastic deals on them.:p I love it.

I love the Charger and the Challenger. If it were sensible for me to own a car in the city, I'd have a Challenger in second. Beautiful car.

[stevento]

The charger didn't do what it was supposed to do. It weighs too much by far. I know the wagon version of the charger was killed, not sure if the charger will be around for much longer.

[quagmire]

No performance? thats funny. I love my Charger. Quiet,Fast.Powerful,Comfortable,Smooth ride,Cool Looking, Awesome Stereo, and you can get fantastic deals on them.:p I love it.

Yeah, he must have driven a Charger with the 2.7 V6. Now that is a god awful engine( I had it in our families old Sebring convert). Drive a Hemi one, and you know it means business. I still prefer the G8 though. Shame Pontiac is dead. :(

[Shivetya]

I am very glad the bond holders are thumbing their noses at Obama Administration's attempt to fleece them.

The thing I really hate about this Administration (don't get me started on the last - which started this mess at keeping the auto makers alive) is that they rely on misinformation in order to intimidate people into taking the action they want.

As in the bond holders, many who are retired workers or retirement funds.

I doubt they would toss out the term hedge funds, because that is exactly what his Wall Street bail out is, a bail out of hedge funds. Yet when it comes down to the small amounts needed to prop up Chrysler and GM we get all sorts of new rules for the money - at least GM and Chrysler produce actual product!

What was going on here was an outright attempt to steal private property for the government and union. Lets see, the government "investment" is less than the bond holders yet the government wants a bigger stake? Same for share holders in GM. The government's stake is less but they want a bigger share?

Bull. The last people who should be given control is the government, the second to last is the unions

[quagmire]

I am very glad the bond holders are thumbing their noses at Obama Administration's attempt to fleece them.

The thing I really hate about this Administration (don't get me started on the last - which started this mess at keeping the auto makers alive) is that they rely on misinformation in order to intimidate people into taking the action they want.

As in the bond holders, many who are retired workers or retirement funds.

I doubt they would toss out the term hedge funds, because that is exactly what his Wall Street bail out is, a bail out of hedge funds. Yet when it comes down to the small amounts needed to prop up Chrysler and GM we get all sorts of new rules for the money - at least GM and Chrysler produce actual product!

What was going on here was an outright attempt to steal private property for the government and union. Lets see, the government "investment" is less than the bond holders yet the government wants a bigger stake? Same for share holders in GM. The government's stake is less but they want a bigger share?

Bull. The last people who should be given control is the government, the second to last is the unions

The bondholders knew they would get screwed in a bankruptcy situation, and yet they still wouldn't find a middle ground while they had the chance. They blew it, let them burn, IMHO.

[Shivetya]

The bondholders knew they would get screwed in a bankruptcy situation, and yet they still wouldn't find a middle ground while they had the chance. They blew it, let them burn, IMHO.

You don't understand the issue.

The government is breaking the law and using intimidation and lies to do it.

There are two types of debt owed by Chrysler

To the bond holders it it secured debt, secured by property

To the unions the debt is unsecured.


Guess what, Obama and Co. are trying to pull one over on Americans. He is throwing the bond holders under the bus in favor of the unions because that what his party does. To hell with the law, votes are all more important.

What this does is ruin business lending going forward, at least with any company that has a union presence. No longer will legal holders of debt be guaranteed their due process.

[quagmire]

You don't understand the issue.

The government is breaking the law and using intimidation and lies to do it.

There are two types of debt owed by Chrysler

To the bond holders it it secured debt, secured by property

To the unions the debt is unsecured.


Guess what, Obama and Co. are trying to pull one over on Americans. He is throwing the bond holders under the bus in favor of the unions because that what his party does. To hell with the law, votes are all more important.

What this does is ruin business lending going forward, at least with any company that has a union presence. No longer will legal holders of debt be guaranteed their due process.

If this was all about getting votes, Obama would have let GM and Chrysler go under a long time ago because the majority of Americans opposed the loans.

Again, the bondholders knew they would be screwed in Chap 11( remember the courts are in the judicial branch of gov't so Obama has no authority in the matter). Wouldn't knowing you would be boned in a Chap 11 proceeding make you more open to make a deal even if it is less then what is truly owed to you? This is the same matter as the UAW members striking down a new contract at a parts plant that they knew if it was shot down the plant will be closed and all 1400 employees would be in the unemployment line. And it was rejected with a 75% "No" vote....... Something is better then nothing......

EDIT: Scratch that, Obama will have a say. Why? Because the gov't is the largest secured debt holder in Chrysler. So it will have the majority vote in bankruptcy. That and all TARP lenders approve of Chrysler's Chap 11 plan( which is basically GM's plan and Chrysler is being used as a test bed to see what needs to be fixed so if GM has to follow, their Chap 11 will be quicker and smoother).

[Sun Baked]

Don't have much confidence in this political event, the back room events are getting rather silly.

The union is preempting established bankruptcy law and leaping ahead in the charging order, and they don't wipe out the majority of the liability owed the union -- they get stock and are keeping a huge chunk of the liabilities intact.

I'm still amazed, that while this was going on the Automotive Task Force is still trying to kill the Chevrolet Volt and one of GM's most profitable division as of a couple weeks ago.

The President makes a speech about needing to take the next step in the auto industry and the administration behind him is still trying to cut off the foot trying to make that step.

[quagmire]

I'm still amazed, that while this was going on the Automotive Task Force is still trying to kill the Chevrolet Volt and one of GM's most profitable division as of a couple weeks ago.

Where did you hear the ATF is trying to kill the Volt? Did you mean GMC as one of GM's most profitable divisions?

Frankly, a lot of what the media is reporting is bull and not the entire truth. And anything from GM is just PR spin. It's getting harder to sift through all the BS.

[geese]

Interesting development:

http://www.nytimes.com/2009/05/05/business/global/05fiat.html?_r=1&partner=rss&emc=rss

Fiat Chief in Berlin to Push for Acquisition of G.M.’s Opel
By CARTER DOUGHERTY

FRANKFURT — The German government on Monday said it would consider helping the Italian automaker Fiat grab control of Opel, the German subsidiary of General Motors, the ailing American giant.

Less than a week after he clinched a deal for a 20 percent stake in Chrysler, Fiat’s chief executive, Sergio Marchionne, traveled to Berlin to convince skeptical German officials that his company was the right match for Opel, which employs more than 25,000 Germans at plants across the country.

<snip>

The bid to bring German officials on board is part of Mr. Marchionne’s effort to recast Fiat, which has revived after a slump in which it was dogged by a reputation for shoddiness, as a credible global player with the economies of scale that automakers need to finance investments in expensive new technology.

Fiat said Sunday that it was prepared to spin off its car business from the rest of the sprawling industrial conglomerate into a new listed company, and combine the business with the European operations of General Motors, which include Opel and the British brand Vauxhall. That company would then hold the stake in Chrysler.

<snip>

“A whole series of reasons show that a takeover of Opel by Fiat would bring clear dangers,” he wrote. “Opel would not be more secure after a Fiat takeover, but would face markedly greater risks.”

If this did happen, then GM wouldn't have a significant presence in Europe, which is a bit barmy for any global car company. And Fiat would be huge!

[Zombie Acorn]

If this was all about getting votes, Obama would have let GM and Chrysler go under a long time ago because the majority of Americans opposed the loans.

Again, the bondholders knew they would be screwed in Chap 11( remember the courts are in the judicial branch of gov't so Obama has no authority in the matter). Wouldn't knowing you would be boned in a Chap 11 proceeding make you more open to make a deal even if it is less then what is truly owed to you? This is the same matter as the UAW members striking down a new contract at a parts plant that they knew if it was shot down the plant will be closed and all 1400 employees would be in the unemployment line. And it was rejected with a 75% "No" vote....... Something is better then nothing......

EDIT: Scratch that, Obama will have a say. Why? Because the gov't is the largest secured debt holder in Chrysler. So it will have the majority vote in bankruptcy. That and all TARP lenders approve of Chrysler's Chap 11 plan( which is basically GM's plan and Chrysler is being used as a test bed to see what needs to be fixed so if GM has to follow, their Chap 11 will be quicker and smoother).

Majority vote in bankruptcy? The judge will determine how the assets are branched out, the same judge will be immune from the Obama administration. These investors will get paid before any employees or pension funds see the money.

The administration wanted to give the investors a back seat behind the UAW on their claims and they got bit in the ass for it by anyone that wasn't receiving TARP funds and were basically under the thumb of the president.

Guess what? They probably also have credit default swaps against chrysler so the pay day is going to happen for them anyway when chrysler declares bankruptcy.

[quagmire]

Majority vote in bankruptcy? The judge will determine how the assets are branched out, the same judge will be immune from the Obama administration. These investors will get paid before any employees or pension funds see the money.

The administration wanted to give the investors a back seat behind the UAW on their claims and they got bit in the ass for it by anyone that wasn't receiving TARP funds and were basically under the thumb of the president.

Guess what? They probably also have credit default swaps against chrysler so the pay day is going to happen for them anyway when chrysler declares bankruptcy.

You need to look up Chap 11 bankruptcy codes.

(a) The holder of a claim or interest allowed under section 502 of this title may accept or reject a plan. If the United States is a creditor or equity security holder, the Secretary of the Treasury may accept or reject the plan on behalf of the United States.

(b) For the purposes of subsections (c) and (d) of this section, a holder of a claim or interest that has accepted or rejected the plan before the commencement of the case under this title is deemed to have accepted or rejected such plan, as the case may be, if—

(1) the solicitation of such acceptance or rejection was in compliance with any applicable nonbankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation; or

(2) if there is not any such law, rule, or regulation, such acceptance or rejection was solicited after disclosure to such holder of adequate information, as defined in section 1125 (a) of this title.

(c) A class of claims has accepted a plan if such plan has been accepted by creditors, other than any entity designated under subsection (e) of this section, that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors, other than any entity designated under subsection (e) of this section, that have accepted or rejected such plan.

http://www4.law.cornell.edu/uscode/11/usc_sec_11_00001126----000-.html

Since the gov't is a creditor in Chrysler, they have a say on to approve Chrysler's plan or not. Combining the gov't, UAW, and the TARP lenders, it brings the vote past the 2/3's vote required to pass the plan. And from what I hear, only 4 creditors didn't approve the plan( small ones at that). The UAW, TARP lenders, and the feds all agreed to the plan before Chrysler filed for Chap. 11.

[Zombie Acorn]

You need to look up Chap 11 bankruptcy codes.



http://www4.law.cornell.edu/uscode/11/usc_sec_11_00001126----000-.html

Since the gov't is a creditor in Chrysler, they have a say on to approve Chrysler's plan or not. Combining the gov't, UAW, and the TARP lenders, it brings the vote past the 2/3's vote required to pass the plan. And from what I hear, only 4 creditors didn't approve the plan( small ones at that). The UAW, TARP lenders, and the feds all agreed to the plan before Chrysler filed for Chap. 11.

In order for you to adopt a plan it has to be deemed lawful, you can't just force a 2/3rd vote and decide to give one entity that is higher up the ladder the shaft. The companies who are holding out were able to force a bankruptcy proceeding, if they were holding CDSs those should be paying off too.

§ 1123. Contents of plan

(a) Notwithstanding any otherwise applicable nonbankruptcy law, a plan shall—

(1) designate, subject to section 1122 of this title, classes of claims, other than claims of a kind specified in section 507 (a)(2), 507 (a)(3), or 507 (a)(8) of this title, and classes of interests;

(2) specify any class of claims or interests that is not impaired under the plan;

(3) specify the treatment of any class of claims or interests that is impaired under the plan;

(4) provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of such particular claim or interest;

(5) provide adequate means for the plan’s implementation, such as—
(A) retention by the debtor of all or any part of the property of the estate;
(B) transfer of all or any part of the property of the estate to one or more entities, whether organized before or after the confirmation of such plan;
(C) merger or consolidation of the debtor with one or more persons;
(D) sale of all or any part of the property of the estate, either subject to or free of any lien, or the distribution of all or any part of the property of the estate among those having an interest in such property of the estate;
(E) satisfaction or modification of any lien;
(F) cancellation or modification of any indenture or similar instrument;
(G) curing or waiving of any default;
(H) extension of a maturity date or a change in an interest rate or other term of outstanding securities;
(I) amendment of the debtor’s charter; or
(J) issuance of securities of the debtor, or of any entity referred to in subparagraph (B) or (C) of this paragraph, for cash, for property, for existing securities, or in exchange for claims or interests, or for any other appropriate purpose;

(6) provide for the inclusion in the charter of the debtor, if the debtor is a corporation, or of any corporation referred to in paragraph (5)(B) or (5)(C) of this subsection, of a provision prohibiting the issuance of nonvoting equity securities, and providing, as to the several classes of securities possessing voting power, an appropriate distribution of such power among such classes, including, in the case of any class of equity securities having a preference over another class of equity securities with respect to dividends, adequate provisions for the election of directors representing such preferred class in the event of default in the payment of such dividends;

(7) contain only provisions that are consistent with the interests of creditors and equity security holders and with public policy with respect to the manner of selection of any officer, director, or trustee under the plan and any successor to such officer, director, or trustee; and

(8) in a case in which the debtor is an individual, provide for the payment to creditors under the plan of all or such portion of earnings from personal services performed by the debtor after the commencement of the case or other future income of the debtor as is necessary for the execution of the plan.

[quagmire]

Plan Approved.

http://news.bbc.co.uk/2/hi/business/8035239.stm

[Zombie Acorn]

Plan Approved.

http://news.bbc.co.uk/2/hi/business/8035239.stm

They just set a new disgusting precedence for bankruptcy rulings at the same time. Senior lenders get screwed so that political agendas can be furthered, fantastic. I hope they all had CDSs and were betting against their investments, these people have been vilified when in reality they were asked to take the short end of the stick when they should have been first in line. :rolleyes:

Heres hoping that Chrysler goes back in for another dirt nap.

[SLC Flyfishing]

Heres hoping that Chrysler goes back in for another dirt nap.

They will, of that you can be sure. How long has it been since Chrysler has made anything worthwhile? I don't think it's been since the muscle car era of the 60's and 70's, which they've been trying to hang on to ever since. They've even screwed all the brands they've bought up (Jeep, Eagle) What could they possibly do (realistically) that could attract new buyers when there are plenty of other makers who've been turning out fantastic, reliable, consumer minded, and economical vehicles for 20 years straight? They'd have to scrap the entire line of vehicles and start over at the drawing board, and let's face it, they can't really do that right now. This money is just a band-aid trying to stop up a severed jugular.

They'll be in trouble again in no time.

SLC

[mkrishnan]

How long has it been since Chrysler has made anything worthwhile?

Briefly, they ruled the transition to / creation of the minivan segment, but I generally agree. I think Fiat is getting itself in a mess here, and that Chrysler is beyond either capable of or worthy of being saved...

[SLC Flyfishing]

Briefly, they ruled the transition to / creation of the minivan segment, but I generally agree. I think Fiat is getting itself in a mess here, and that Chrysler is beyond either capable of or worthy of being saved...

Yeah, believe it or not I completely forgot about the Grand Caravan (and I'm from Utah, if you've ever spent any time in Utah you'll laugh about me forgetting that). I guess that was a big seller, but still it wasn't well built or reliable, especially not when compared to the offerings from Toyota and Honda that sprung up as a result.

I just think that even more than in the past, people are becoming aware of just how poorly designed and poorly constructed Chrysler vehicles are. Maybe I'm just bitter because I've had a soft spot for Jeeps ever since the CJ7 was on the scene. It's terrible to see what the Chrysler corporation did to the CJ series legendary rock solid overly built nature when they turned it into the Wrangler. It took a few thousand dollars worth of modifying to get a wrangler to be as capable as the CJ's were. That'd be fine if they weren't still trying to sell them as highly capable off road vehicles.

SLC

[takao]

They will, of that you can be sure. How long has it been since Chrysler has made anything worthwhile? I don't think it's been since the muscle car era of the 60's and 70's, which they've been trying to hang on to ever since. They've even screwed all the brands they've bought up (Jeep, Eagle) What could they possibly do (realistically) that could attract new buyers when there are plenty of other makers who've been turning out fantastic, reliable, consumer minded, and economical vehicles for 20 years straight? They'd have to scrap the entire line of vehicles and start over at the drawing board, and let's face it, they can't really do that right now. This money is just a band-aid trying to stop up a severed jugular.

They'll be in trouble again in no time.

SLC

well it will go down like this:
Fiat getting into US dealerships
converting a plant to produce 500s and Puntos
getting out some bigger platforms for fiats/lancia
integrating jeep into fiat

everything else is up for the bin

[mkrishnan]

Yeah, believe it or not I completely forgot about the Grand Caravan (and I'm from Utah, if you've ever spent any time in Utah you'll laugh about me forgetting that).

A row of seating for each wife? :eek: ;)

As for the 500 or Grand Punto in the US, I'm not sure. Maybe. They're much prettier than Japanese offerings in the B and smaller segment.

Overall, I'm not really sure how competitive Fiats would be in the US... or what Fiat's mindset is. I really don't understand the sensibility of them trying to buy GME assets at all, for instance.

[SLC Flyfishing]

A row of seating for each wife? :eek:

That might have worked 110 years ago, now it's what we call a Mormon Wagon, it takes a minivan or two to cart all those kids around.

I'm not lying when I say that there are some neighbors of mine who bought minivans when they got married, even though they had no kids.

It's even joked that guys at BYU buy minivans instead of sportscars to attract the girls.

Minivans are almost like a status symbol here (almost).

Me, I've got 2 kids and would probably have 1 more. We went for the SUV instead, but I like to go against the grain ;) I wouldn't be caught dead hauling around in one of those. And lucky for me, neither would my wife; in fact, she told me that if I ever bought her a minivan, she'd leave me! :D

SLC

[Sun Baked]

Chrysler bankruptcy creates lemon law turmoil (http://www.latimes.com/business/la-fi-lemonlaw9-2009may09,0,3217006.story)

Since Chrysler filed for Chapter 11 bankruptcy protection April 30, financial claims incurred before the filing can be paid only if approved by the bankruptcy judge. Chrysler has not asked for permission to make payments on lemon law complaints -- and that is causing headaches for some of its customers.

Alex Simanovsky, an Atlanta attorney whose firm handles lemon law cases in California and other states, said he had "a stack of six or seven checks in my drawer right now from Chrysler that have bounced."

The amounts range from $2,000 to $3,000 for clients who were accepting cash payments to as much as $40,000 in cases where Chrysler agreed to repurchase the vehicle.

"There has been no determination if these accounts are going to be unfrozen [by the Bankruptcy Court] and the checks will be good," Simanovsky said. "My feeling is they will not be."

Wow, Chrysler and the big BK ... way to **** over the buyers and instill confidence in the product.

Rubber settlement checks to your buyers. :eek:

Some of these people have had problematic cars, suffered through the process and have lost their car and no payment in sight.