Chrysler in court today hoping for swift bankruptcy process – but some lenders resist

May 1, 2009

(ChattahBox) — Chrysler LLC will idle all of its plants today as the bankrupt automaker seeks court protection and approval of a partnership with Italy’s Fiat SpA. Chrysler will ask a U.S. District Bankruptcy Judge to allow the immediate moves necessary to keep the company open during bankruptcy. Bankruptcy Court Judge Arthur Gonzalez will have to reach a decision on creditors that hold $6.9 billion of the Chrysler’s debt. Banks holding 70 percent of the debt agreed this week to a deal. But 20 lenders who hold the other 30% will challenge the terms of a government-brokered deal, saying it was unfair. The US government has called for a quick, “surgical” bankruptcy, with the process completed within two months. Observers have suggested the unhappy lenders though could delay Chrysler’s recovery plan.

Chapter 11 bankruptcy protects firms from their creditors, allowing them to rearrange their finances while still trading. Lawyers are expected to ask the judge to force the resisting creditors to accept the same offer that institutions holding 70% of Chrysler’s debt have approved. Meanwhile, Chrysler hopes to sell/move its core assets, into a new company that would be owned by the US government, Fiat, and the company’s workers. Chrysler has said it will close all of its plants from Monday until the carmaker comes out of bankruptcy. Chrysler Canada, which is not part of the bankruptcy filing, is expected to keep its plants operating until it runs out of parts. The U.S. and Canadian governments are loaning Chrysler about $4 billion in debtor in possession financing to allow the company to operate under court protection.


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One Response to “Chrysler in court today hoping for swift bankruptcy process – but some lenders resist”

  1. Topics about Lenders » Chrysler in court today hoping for swift bankruptcy process - but … on May 1st, 2009 3:15 pm

    […] Another fellow blogger created an interesting post today on Chrysler in court today hoping for swift bankruptcy process – but …Here’s a short outline(ChattahBox) — Chrysler LLC will idle all of its plants today as the bankrupt automaker seeks court protection and approval of a partnership with Italy’s Fiat. […]

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