Chrysler to file for bankruptcy

According to the BBC, Chrysler is slated to begin filing for bankruptcy today. The news came after negotiations between Chrysler and its creditors fell apart late last night, with creditors turning down an offer for $2 billion in cash, in exchange for the $6.9 billion that Chrysler owed to its major lenders. Although 70% of creditors were in favour of the deal, a small minority of hedge funds stood in the way. A deal had to be reached by midnight tonight (April 30th, 2009) in order to qualify for the next round of government loans.

President Obama claims that this won’t be the end of the ill-fated pentastar brand, saying that Chrysler will emerge from bankruptcy as a stronger company. In fact, Chrysler may actually gain from Chapter 11 bankruptcy proceedings, with creditors getting even less than the $2 bn. previously on the table.

The bankruptcy is just one more blow to the Chrysler-Dodge-Jeep brand, with Daimler recently giving up its final 19% stake in the company, and writing down the last of Chrysler’s debts owed to them. Daimler called this the final separation between the two firms.

It is now up to company brass to entice Fiat into picking up 20% of the company. This would give the Fiat group, whose products range from Ferrari supercars to Case-New Holland farm equipment, better access to the North American market, while giving Chrysler access to Fiat’s expertise in building small cars.

via BBC

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