Chrysler to File For Bankruptcy

A last minute plan fell apart and Chrysler will file for bankruptcy. President Obama says it's probably a wise move.

Chrysler will file for Chapter 11 bankruptcy protection in New York, giving Chrysler time to galvanize a partnership with the Italian car maker Fiat Group SpA. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.

The deals give Chrysler "a new lease on life," President Barack Obama said. "This is not a sign of weakness," he said. "I have eery confidence that Chrysler will emerge from this process stronger and more competitive."

Some good news for Chrysler owners (including Jeep owners like me) and dealers: "Chrysler would still sell cars and the government would back its auto warranties." I'm taking mine in tomorrow for its 3,000 mile checkup.

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    Its about time (5.00 / 1) (#1)
    by Abdul Abulbul Amir on Thu Apr 30, 2009 at 11:58:44 AM EST

    This gives a New Chrysler a chance.

    My Dodge Durango has 147K miles (5.00 / 0) (#10)
    by sarcastic unnamed one on Thu Apr 30, 2009 at 01:44:20 PM EST
    and runs like a champ.

    I have a 1966 VW bug... (none / 0) (#25)
    by desertswine on Thu Apr 30, 2009 at 03:00:45 PM EST
    with over 200,000 miles on it. I don't drive it much anymore. Because its a death trap. Thank god I've never been in an accident with it. But it certainly has been dependable.

    My first car was a Bug. (none / 0) (#27)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 03:16:41 PM EST
    I had a few accidents in it and was able to walk away with nary a scratch each and every time.  Even when the other car involved was an old tank-like Impala.

    Simple to maintain, good gas mileage, handled the snow like a champ, could take it off-road no problem--only thing that didn't work well was the heater/defroster.  


    You're right about the good handling... (none / 0) (#31)
    by desertswine on Thu Apr 30, 2009 at 03:44:52 PM EST
    especially in the snow. The heater/defroster never worked well, and, in my case, the chick magnet device was broken as well.

    ...except when you're travelling down the (none / 0) (#40)
    by easilydistracted on Thu Apr 30, 2009 at 04:19:49 PM EST
    highway at full speed. The heater was a bit too efficient then.

    Quite obviously, they don't build them like that anymore
    I was with until that last sentence.

    Actually, they do build them like that anymore, it's just people like you (no offense) don't want to take an unbiased look at what they're doing now.


    What they are doing is, in the main, (none / 0) (#61)
    by sarcastic unnamed one on Fri May 01, 2009 at 12:18:23 AM EST
    making cars that are at least as good as the Japanese.

    Berate? I think you're reading too much into what I write.

    You, and, sadly, many other Americans choose not to delve into US auto's quality.

    That is not a berate, er, ment, it is a statement of fact.

    So, the way I see it, the ball's in the Big Three's court, and not in mine. And if they fail, it's because they blew it.

    I couldn't agree more. The US makers have ceded your brand loyalty to the Japanese. That is on them.

    That does not change the fact that their cars are, today, every bit the equal of the Japanese.


    Not everyone is happy (5.00 / 1) (#22)
    by jbindc on Thu Apr 30, 2009 at 02:34:00 PM EST
    A group of senior Chrysler's creditors that didn't take TARP funds are not happy with this deal.

    As of last night's deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country's teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.

    As much as anyone, we want to see Chrysler emerge from its current situation as a viable American company, and we are committed to doing what we can to help. Indeed, we have made significant concessions toward this end - although we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.

    What created this much-publicized impasse? Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler's rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with 100% recoveries, while even GM's unsecured bondholders are receiving a far better recovery than we are as Chrysler's first lien secured lenders.

    Our offer has been flatly rejected or ignored. The fact is, in this process and in its earnest effort to ensure the survival of Chrysler and the well being of the company's employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.

    We have a fiduciary responsibility to all those teachers, pensioners, retirees and others who have entrusted their money to us. We are legally bound to protect their interests. Much as we empathize with Chrysler's other stakeholders, the capital is just not ours to contribute to their cause by accepting a deal that is outside the well established legal framework and cannot be rationalized as being commercially reasonable.

    We are continuing to discuss our position with the United States Treasury. We have made a proposal which we earnestly believe is fair and would appropriately recognize our legal position.

    As President Obama implied yesterday, it is likely that Chrysler will have to file Chapter 11 whether or not all lenders agree to any particular proposal. Chapter 11 is often used to help implement an agreed deal and dispose of unwanted legacy liabilities. We are hopeful and optimistic that we will reach a positive resolution of our issues so that all stakeholders will move forward together to implement Chrysler's "quick trip" restructuring in an un-contested proceeding. Our Group will never initiate a bankruptcy filing on Chrysler - that is a decision for the Company and the Administration to make.

    As we all appreciate, laws are the foundation of our economy and society. Despite recent travails, our country remains the economic envy of the world and the United States remains a vital engine of global growth. The rule of law made it that way. We urge that people remember this and not succumb to unproductive and unwarranted finger pointing.


    The Committee of Chrysler Non-Tarp Lenders

    Wow! (none / 0) (#26)
    by Abdul Abulbul Amir on Thu Apr 30, 2009 at 03:08:07 PM EST

    Those greedy pensioners wanted the repayment they were entitled to.  How dare they!


    cost-effective? (4.50 / 2) (#23)
    by diogenes on Thu Apr 30, 2009 at 02:39:16 PM EST
    Wouldn't it make more sense to liquidate Chrysler and spend the eight billion (and endless more billions in the future) on a more viable car company like GM or Ford, if the government feels such a compelling need to have a jobs program that supports car jobs.
    This Chrysler-Fiat "merger" is a ripoff in which the US govt gives billions, Fiat risks nothing, and Fiat scoops up profits without risk.

    I like Obama's statement on the hedge funds (4.00 / 2) (#13)
    by ruffian on Thu Apr 30, 2009 at 01:49:55 PM EST
    Now, while many stakeholders made sacrifices and worked constructively, I have to tell you, some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout.

    They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting.

    I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars.

    I don't stand with those who held out when everybody else is making sacrifices.

    I hope it is a shot across the bow to the rest of the financial industry about taking extreme and unfair advantage of the taxpayer's largesse.

    Oh yea (none / 0) (#14)
    by CST on Thu Apr 30, 2009 at 01:57:44 PM EST
    great comment.

    Now if only he would say the same thing to the bank executives...


    Exactly. I wish he would. (5.00 / 1) (#16)
    by ruffian on Thu Apr 30, 2009 at 02:00:14 PM EST
    I'm hoping he is finally fed up - certainly that statement gives me more confidence that he does see what is going on.

    And to the leaders of the "opposition" (none / 0) (#32)
    by easilydistracted on Thu Apr 30, 2009 at 03:48:50 PM EST

    I think it is hedge 'fund' (none / 0) (#18)
    by waldenpond on Thu Apr 30, 2009 at 02:23:35 PM EST
    not hedge funds (plural).  I keep pointing out that Chrysler is owned (80%) by Cerberus, so much so, I feel like a broken record.  I never use the word Chrysler... I have always used Cerberus.  The process has always been about Cerberus.  Oh, another detail... Cerberus bought Chrysler, auto parts manufacturers and car rentals... AIG backs Chrysler and has been manipulating the parts after market to favor Chrysler.

    [Under the guise of providing a superior collision repair experience, the AIG moguls are directing their policyholder claimants to specific dealers whereby they will get only OE parts and at an additional 10 percent discount, which they will direct to the impacted body shop--that shop doing the repair.] AIG


    thanks for the info (none / 0) (#19)
    by ruffian on Thu Apr 30, 2009 at 02:29:29 PM EST
    I am not up to speed, so to speak.

    I would take that comment (none / 0) (#20)
    by Makarov on Thu Apr 30, 2009 at 02:30:01 PM EST
    seriously, if the same hedge funds weren't also advising the government about the current financial crisis:

    From January:
    "Perella Weinberg Partners, the investment bank founded by Joseph R. Perella, the former vice chairman of Morgan Stanley, has been hired by the Federal Deposit Insurance Corporation to advise it on strategies and transactions to stabilize the banking system."

    This week -
    ""Fund management companies that own Chrysler LLC's secured debt had been holding out against the automaker's proposed restructuring terms as of Wednesday afternoon.

    Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital were unprepared to accept the U.S. Treasury's previous offer of $2 billion in cash, the sources said.""

    I'd take it even more seriously if the government would say how much we're paying them to advise us:



    sigh (none / 0) (#24)
    by ruffian on Thu Apr 30, 2009 at 02:45:46 PM EST
    There goes my ray of hope. Thanks, I guess.

    American Cars (3.00 / 1) (#28)
    by bocajeff on Thu Apr 30, 2009 at 03:27:28 PM EST
    To me, not buying a car made by an American worker is wrong. I don't begrudge anyone for buying foreign, but these are your neighbors who are working for the companies that you aren't patronizing.

    I go to Detroit a lot for family reasons and I can't stand the sight of a foreign car. And then they complain about unemployment, etc...

    What about (5.00 / 1) (#30)
    by CST on Thu Apr 30, 2009 at 03:39:00 PM EST
    the fact that toyota is now built in the U.S.?

    Buying a car from a "foreign" company does not necessarily mean it was built by foreigners.


    The point is (none / 0) (#33)
    by jbindc on Thu Apr 30, 2009 at 03:53:52 PM EST
    Had people bought American-company cars all along (and little things like trade imbalances with Japan had not been allowed by our government), then those plants would be GM, Ford, and Chrysler plants and still American workers.

    So the consumer is to blame... (5.00 / 1) (#37)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 04:09:02 PM EST
    ...for the Big 3 producing crap that a lot of people had no interest in buying.  

    To hell with the free market and consumer choice!  You'll buy this POS Pinto/Vega/Gremlin and you'll like it.  Go USA!


    And don't forget GM's foray into the diesel (none / 0) (#39)
    by easilydistracted on Thu Apr 30, 2009 at 04:16:42 PM EST
    engine market in the early eighties. Converting a standard 350 engine block designed for gasoline, gimme a break. GM refused to ever admit any wrongdoing.    

    Exactly. (5.00 / 1) (#41)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 04:30:37 PM EST
    Detroit has nobody to blame for their problems but themselves.  From product design to  engineering to production standards, they had the market firmly in hand and got complacent.

    At the risk of piling on: (none / 0) (#44)
    by easilydistracted on Thu Apr 30, 2009 at 04:36:36 PM EST
    The Oldsmobile diesel engines gained a reputation for unreliability and anemic performance that badly damaged the North American passenger diesel market for the next 20 years.

    My old man... (5.00 / 1) (#45)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 04:41:40 PM EST
    ...being a diesel locomotive engineer was big into diesel engines of all kinds.  So, being a good Union man and proud Iowan, he bought one of those GM diesels.  Last American car he ever owned.  

    Off topic a bit (sorry Jeryalyn) (none / 0) (#47)
    by easilydistracted on Thu Apr 30, 2009 at 04:46:13 PM EST
    what railroad? I worked as a brakeman on the road for five years, prior to joining management.  

    The Chicago, Rock Island and Pacific Railroad (none / 0) (#51)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 04:52:21 PM EST
    He started out as a brakeman, then was a fireman and then engineer.  

    After they went belly-up, he went to work for the Feds as a RR inspector.


    I remember when they tried to rebrand (none / 0) (#52)
    by easilydistracted on Thu Apr 30, 2009 at 04:55:24 PM EST
    themselves as "The Rock."

    There are still a few... (none / 0) (#53)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 05:00:27 PM EST
    ...of those old blue "The Rock" box/hopper cars out there.  I see them on the coal trains once in awhile.  

    What RR did you work for?


    Two months with the "Rock" (none / 0) (#54)
    by easilydistracted on Thu Apr 30, 2009 at 05:04:52 PM EST
    and then went to work for BN. Edgemont SD to Gillette, WY and then on the loading pools between Gillette and the coal mines in the powder river basin.

    Ah yes... (none / 0) (#63)
    by MileHi Hawkeye on Fri May 01, 2009 at 09:28:56 AM EST
    ...the Badlands of Wyoming.  I've done the drive up I-25 to Buffalo to meet my brother on his way out to Washington State too many times to count.  Never fails that somewhere between Casper and Cheyenne I start to nod-off.

    Yeah (none / 0) (#42)
    by jbindc on Thu Apr 30, 2009 at 04:32:05 PM EST
    'cuz Datsun and Isuzu and some crappy Corollas were the way to go....

    Move those goalposts! (none / 0) (#46)
    by MileHi Hawkeye on Thu Apr 30, 2009 at 04:42:32 PM EST
    Push 'em back, way back!!

    Yes (none / 0) (#49)
    by jbindc on Thu Apr 30, 2009 at 04:46:32 PM EST
    Quality was bad - 30 years ago.  Not so in the last decade or so - what's the excuse now?

    No excuse. It remains Detroit's fault. (5.00 / 1) (#50)
    by easilydistracted on Thu Apr 30, 2009 at 04:51:07 PM EST
    Once you lose a customer, you may never get that customer back -- regardless of how hard one tries to earn back that customer's respect. Example, Pizza Hut pi**ed me off in the 90s when they used old Rush as a national spokesperson. I've not returned to Pizza Hut since. Its a personal boycott thingie.

    I believe... (none / 0) (#64)
    by MileHi Hawkeye on Fri May 01, 2009 at 09:33:51 AM EST
    ...it is called negative branding.  And once your brand takes on a negative connotation, it is extremely hard to get rid of the perception.

    The old saying holds true--an unhappy customer is going to tell at least 10 people of their displeasure and word (and perceptions) spreads exponentially.


    Also (none / 0) (#34)
    by jbindc on Thu Apr 30, 2009 at 03:54:23 PM EST
    Some of us would rather have profits go to Detroit and not Tokyo or Frankfurt

    We all have our own priorities (none / 0) (#36)
    by CST on Thu Apr 30, 2009 at 04:05:22 PM EST
    some of us also think it is morally imperative to drive fuel efficient cars.

    For the record, I don't even own a car, I take the train.  So I am really on the sh*t list.


    Nah (none / 0) (#38)
    by jbindc on Thu Apr 30, 2009 at 04:14:08 PM EST
    But my Chevy Cobalt gets an average 36 mpg.



    Auto dealer was pleased (5.00 / 1) (#58)
    by waldenpond on Thu Apr 30, 2009 at 10:31:16 PM EST
    with his Ford sales, they were doing fine. Problem?  The reporter pointed out to the salesman the model he was promoting was made with parts from Japan and manufactured in Mexico.  The only thing American about it was the name and I doubt the emblem was made in America.

    I like to pretend so I buy Ford, but I don't believe I am supporting an American production job or American manufacturer.


    I wonder (none / 0) (#29)
    by jbindc on Thu Apr 30, 2009 at 03:33:02 PM EST
    If it will get as bad as it did during the '80s when foreign cars constantly got keyed and scratched? (Not that I am advocating property damage).

    Back in the day at the auto companies, you could park in the lots closest to the plant/office if you drive the company's product.  If you drove another American brand, you had to park a bit farther away.  If you drove a foreign car, you had to park waaaayyyyy far away, sometimes across a highway.  Not a good walk in the dead of winter, so it certainly encouraged workers to buy American.


    What an ironic typo (none / 0) (#2)
    by standingup on Thu Apr 30, 2009 at 12:12:36 PM EST
    "I have eery confidence that Chrysler will emerge from this process stronger and more competitive."
    I assume that should be "every confidence" instead of "eery."

    Maybe his 'eery confidence' (none / 0) (#12)
    by ruffian on Thu Apr 30, 2009 at 01:46:51 PM EST
    goes along what the press calls his 'preternatural calm'.

    Nah, just a (none / 0) (#59)
    by NYShooter on Thu Apr 30, 2009 at 10:35:45 PM EST
    teleprompter hacker, with a sense of humor.

    Hopefully you mistyped, did you mean 30,000 mile checkup?

    If you really did mean 3,000 mile checkup you are being car-jacked.

    Please tell us you meant 30,000...

    some people (none / 0) (#7)
    by Makarov on Thu Apr 30, 2009 at 01:31:03 PM EST
    get oil changes every 3K miles, although it really isn't necessary. I do mine every 5-6K.

    Let's hope that's it - (none / 0) (#11)
    by sarcastic unnamed one on Thu Apr 30, 2009 at 01:45:53 PM EST
    and that she's going to some quickie lube place and not the stealer...

    How is the government going to (none / 0) (#4)
    by Slado on Thu Apr 30, 2009 at 12:32:25 PM EST
    back the warranties exactly?  Doesn't that just mean the government will cover the debts Chrysler inccurs because they are broke and can't afford to honor them?

    What is the taxpayer going to get for 12billion dollars?

    Why didn't we just let Chrysler go bankrupt in the first place?

    Excellent, get your (none / 0) (#5)
    by Wile ECoyote on Thu Apr 30, 2009 at 01:01:02 PM EST
    oil changed on the taxpayer!  Ask for synthetic, it is more expensive.

    Details on the restructuring (none / 0) (#9)
    by jbindc on Thu Apr 30, 2009 at 01:41:22 PM EST
    I loved my Sebring (none / 0) (#15)
    by ruffian on Thu Apr 30, 2009 at 01:58:46 PM EST
    I'd get another one sometime if they are still making them. I only traded it cuz it was too small for two big dogs.

    Multi-GM car family (none / 0) (#17)
    by jbindc on Thu Apr 30, 2009 at 02:15:02 PM EST
    The only POS car we ever had when was my parents lost their minds and bought a brand new little foreign car for me and my sister to use. Dad had 2 GMC vans that had almost 200,000 miles each.

    Never had a bad American car.


    Actually, I haven't either (none / 0) (#21)
    by ruffian on Thu Apr 30, 2009 at 02:31:50 PM EST
    come to think of it. I didn't like my '74 Dodge Dart much, but mostly just for style reasons....

    Global market (none / 0) (#35)
    by mmc9431 on Thu Apr 30, 2009 at 04:01:13 PM EST
    How can we be expected to be competative in the global market when we're the only country that still puts the burden of healthcare on the employer/employee?

    The only way we can level the playing field is with national heathcare.

    Oh come on. (none / 0) (#56)
    by sarcastic unnamed one on Thu Apr 30, 2009 at 05:28:11 PM EST
    It takes $X to provide healthcare for "the people" - whether that money comes from the people directly at the time of service, or from the people through payroll deduction health insurance plans, or from the people through income taxes, either way "the people" pay essentially the same amount and that amount is added into the cost structure of whatever goods/services "the people" provide.

    Should have happened years ago (none / 0) (#55)
    by KoolJeffrey on Thu Apr 30, 2009 at 05:19:14 PM EST
    This company has been a disaster for decades.  

    My 1990 Jeep Wrangler was a plastic piece of garbage. The assembly of it was horrible. They misinstalled the grommet leading from the gas pipe to the tank. Excess fuel would leak into the chassis, turning my car into a rolling bomb.

    It's time for this misbegotten enterprise to die now.

    check this out (none / 0) (#60)
    by NYShooter on Thu Apr 30, 2009 at 10:59:26 PM EST
    Being an executive for the Goodyear Tire & Rubber Co. for many, many years, naturally I bought, and drove, only American branded autos. My last assignment took me to upstate NY, and required 40-50,000 of travel yearly. So, I purchased my first SUV, a beautiful GMC Envoy. Everything was great about the vehicle......except the lights. I blew out 40 lights in two years; headlights, directionals, brake lights, parking lights, made no difference; they kept blowing. Every trip to the dealer, same excuse: coincidence. They kept replacing bulbs, relays, switches, etc; nothing fixed the problem.
    After two years, they started charging for the replacements; I went nuts! They calmly pointed to the "limited warranty" and gave me G.M's Detroit problem resolution dept.

    Now please, I know what I'm about to tell you calls my sanity into question, but I swear on my eyes, it's 100% true. I called G.M, Detroit, explained my problem to the lady, and stated that it's more Detroit's fault, than the dealer's, and that G.M. should continue the warranty, at least for the lights, since they were never fixed. Her response: G.M's obligation is finished (2 year warranty on lights,) The dealer is an independent businessman, and therefore cannot be compelled to fix the lights. So, she said to me sweetly, "If I were you, I'd take "your" problem to The Better Business Bureau."

    Forty years, every two years, like clockwork, a new American car........G.M's attitude....up yours!

    Let them all die.

    We finally dumped my wife's POS Benz (none / 0) (#62)
    by sarcastic unnamed one on Fri May 01, 2009 at 12:21:24 AM EST
    a month or so ago.

    Don't get me started.


    German cars (none / 0) (#65)
    by CST on Fri May 01, 2009 at 09:33:54 AM EST
    fun to drive, notoriously bad electric problems.

    The only car I ever owned was a '96 Golf in college.  Eventually I had to give it away since I couldn't afford to fix it anymore.

    The transmission was great (manual), the enigne was great, it was fun to drive, but man did everything else fall apart.  Especially the electrical.  And I have heard the same story from everyone I know who has had a German car.


    I've had a couple of VW's... (none / 0) (#66)
    by MileHi Hawkeye on Fri May 01, 2009 at 09:42:48 AM EST
    ...and never had any electrical problems nor have any of the family who drive MB's.  Now, my friends who have had British cars/motocycles, on the other hand, did have constant problems with that.