BREAKING NYT: Treasury Preparing Chapter 11 Bankruptcy Filing for Chrysler

[MadBadger]

The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that could come as soon as next week, people with direct knowledge of the action said Thursday.

The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing, said these people, who asked for anonymity because they were not authorized to discuss the case.

Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.

The only major question that remains unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler. Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake.

http://www.nytimes.com/2009/04/24/business/24chrysler.html?_r=1&hp

[Zynx]

1. Wow, they really have looked to bust the balls of their creditors.

Obviously, we can see that there will be a compromise on that, but if it is anywhere near the government's offer, creditors are taking a huge hit. They should, but still I am impressed at Treasury on this.

[Romulox]

2. This is not how bankruptcy works. Which makes me think this is a phony leak...

"The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing"

This is not how bankruptcy works.

[ecstatic]

3. will people who own chryslers lose most of the value of their cars?

Would it make trading-in difficult? Just wondering as I know someone who is concerned about this.