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Chrysler Will File For Bankruptcy After All

From an outraged Associated Press:

Officials tell AP Chrysler will file Chapter 11

By Tom Krisher And Ben Feller, Associated Press Writers

WASHINGTON – Officials tell the AP that Chrysler will file for bankrutpcy [sic] as talks with creditors fail.

The No. 3 U.S. automaker faces a government deadline of 11:59 p.m. Thursday to have deals in place with labor, creditors and Italian automaker Fiat. Two of the three pieces appeared to be in place. A small group of debtholders were the remaining obstacle, as they hold out for a better deal from the U.S. government.

Talks between Chrysler LLC’s lenders and the Treasury Department to reduce the automaker’s secured debt and keep it out of bankruptcy protection broke down early this morning, a person familiar with the talks said.

Four banks with 70 percent of Chrysler’s $6.9 billion debt had agreed to erase it for $2 billion, or less than 30 cents for each dollar held. That left Chrysler’s fate in the hands of about 40 hedge funds with about 30 percent of the debt.

To entice the hedge funds into going along with the banks, the government on Wednesday afternoon added $250 million to the $2 billion that the banks had settled for and gave the hedge funds a 6 p.m. deadline to work it out, two people briefed on the talks said.

Of course it’s the fault of those wicked hedge fund people – like George Soros and Chelsea Clinton.

It still boggles the mind to hear how the government is giving such a storied corporation dictates and deadlines.

You used to have to go back to Fascist Italy to hear such language. Or at least to Venezuela.

By the way, if Chrysler or GM do finally go bankrupt, what happens to all of the taxpayer money that have been shoveled their way?

Was it ‘responsible’ for Mr. Obama to give them so many taxpayer dollars when they were going to go belly up anyway?

This article was posted by Steve on Thursday, April 30th, 2009. Comments are currently closed.

38 Responses to “Chrysler Will File For Bankruptcy After All”

  1. pdsand says:

    I hope we don’t get a dime back. That way for all time this will stand out as a filthy stinking example to future presidents and congress that bailouts, at least like this, don’t work.

    • gipper says:

      It also shows how UAW helped cause the company to fail, too.

    • pdsand says:

      This whole thing should have been going on in bankruptcy court, not kangaroo court, Obama style. It seemed that an interested party, the UAW was the judge and trustee in this bankruptcy proceeding. I’m thoroughly relieved that it appears to have failed. At long last somebody, the wicked hedge funds, had some business sense about themselves. They didn’t become so tingly in the presence of Obama that they threw all dang common sense out the door.

  2. BillK says:

    Fascist Italy?

    A forced sale to Fiat?

    Coincidence?

    From Wikipedia’s article on Fiat:

    Fiat made military machinery and vehicles during World War II for the Army and Regia Aeronautica and later for the Germans. Fiat made obsolete fighter aircraft like the biplane CR.42, which was one of the most common Italian aircraft, along with Savoia-Marchettis, as well as light tanks (obsolete compared to their German and Soviet counterparts) and armored vehicles. The best Fiat aircraft was the G.55 fighter, which arrived too late and in too limited numbers. In 1945 — the year Mussolini was overthrown — the Italian Committee of National Liberation removed the Agnelli family from leadership roles in Fiat because of its ties to Mussolini’s government. These were not returned until 1963, when Giovanni’s grandson, Gianni , took over as general manager until 1966, as chairman until 1996. …

    http://en.wikipedia.org/wiki/Fiat

    I know Fiat is a different company today, I just found the comment humorous. :-)

  3. caligirl9 says:

    Seriously, did those reporters (and a copy editor I presume) let “bankrutpcy” get past them?

    So much for that quality “journalism” education LOL

  4. proreason says:

    Easy prediction = the government knee-breakers will put the UAW bailout back together within 48 hours.

    Hedge fund operators think they have a future in this country and will be easily “persuaded”.

    They will be wrong on both counts.

  5. JohnMG says:

    …..”By the way, if Chrysler or GM do finally go bankrupt, what happens to all of the taxpayer money that have been shoveled their way?……”

    Six cents on the dollar is my guess. I mean, even if we could get a class action suit settled in our favor, where would the settlement come from?

    • Liberals Demise says:

      Good question John!! Oblomy will crank up the printing presses and crap some more worthless I.O.U. chits.

  6. GetBackJack says:

    Here’s my conundrum … Detroit says they don’t want to build clean efficient ‘eco’ cars that have less impact on the environment because the public doesn’t want those cars. But Detroit has gone bankrupt building and selling the vehicles their marketing people claim Americans do want.

    I’m confused. They went bankrupt selling cars America ‘does want’ but don’t want to build cars “Americans doesn’t want”.

    Is the room spinning, or is it just me?

    • proreason says:

      GetBack: the room isn’t spinning, it’s the UAW and US regulations.

      The Big-3 are profitable in every country except the USA.

    • pdsand says:

      They didn’t go bankrupt selling cars Americans want. Their trucks and SUVs are all profitable, and for the last decade or so the profits from the big vehicles has been covering the gaping losses on cars and sedans. The government has required cars for the U.S. be produced in U.S. factories at staggering expense due to the UAW. During the crisis caused by fuel costs, Americans generally did not buy as many new vehicles at all, but specifically not as many large trucks and SUVs. Therefore for the first time, the profits from the vehicles we do want to buy was not there to cover the losses on vehicles we don’t want. And since the UAW was already sucking Chrysler and GM dry when they were barely profitable, the slightest downturn in sales was enough to make the whole house of cards collapse.

      The room is not spinning.

  7. MinnesotaRush says:

    I can look around any local parking lot and see all kinds of cars that people want to drive and own. The one’s that are there!

    It certainly seems that SUV’s are amongst the most popular.

    Electric cars .. short range between recharge. Natural gas .. short range between lengthy refills.

    Government mandates and legacy costs are most instrumental in the demise of the American manufacturers. Both created by the government and the UAW (and foolish management that succumbed to the UAW constantly – but the UAW wanted to be compensated like gov’t workers or better) who will remain on the job at our expense and be ordered to build cars that we will be ordered to drive (after gasoline costs are driven thru the roof).

    More gov’t control.

  8. U NO HOO says:

    “It still boggles the mind to hear how the government is giving such a storied corporation dictates and deadlines.”

    Watch The Betsy for an Italian slant on this saga.

  9. retire05 says:

    Here is how this works:

    Bonds were sold by Chrysler to raise immediate cash, just as cities sell bonds to raise immediate cash for projects (municipal bonds). They sell these bonds with a guaranteed rate of return. So investors, either privately or through their retirement funds, bought Chrysler bonds as investments that promised a certain return percentage.

    The administration cut a deal with the banks to lower the debt held by them against Chrysler. But this was not a big deal as they were the same banks that we, the taxpayer, just bailed out. My guess is the banks did this on the basis that the government would lower the amount the banks owed the taxpayer, but that information has not come out (as is standard with this new transparent administration). Then the administration offered the bond holders 29 cent on the dollar (29%). But it was reported that the UAW (United Auto Workers) would get 45-65% guaranteed return, AND UAW officials would be sitting on the board of Chrysler. This would have totally put the screws to the bond holders.

    So the bondholders, private investors like you and me, whould take a beating.

    Monday there was a meeting of the bondholders who were represented by the companies that held those bonds for the investors. These companies knew they were being raked over the coals by the administration and said not no, but hell, no. The bond holders understood that in the hiarchy of those to be repaid when bankruptcy is filed, they are first in line, not the union that Obama has been covering for.

    So the very people who are going to be required to pay the taxes to cover the billions already given to both Chrysler and the lending banks were the ones that were going to get hosed.

    So now Chrysler will file bankruptcy. But unlike normal bankruptcies, it seems the administration, through Geithner, was cutting deals out of the perview of the bankruptcy court. This is the part that is totally unheard of. No administration, since FDR, has ever involved itself in privately held corporations like this one has.

    My guess is that there are eventually going to be law suits filed as the Obama administration picks winners and losers. It took only a short two years before FDR’s tinkering with private industry (the National Recovery Act) before it was challanged in the SCOTUS and ruled unconstitutional.

    To me, it would be a thing of beauty to watch Obama’s wheeling and dealing ruled unconstitutional.

    • proreason says:

      Ruled unconstitutional by who?

      The 5 libwits on the Supreme Court, at least 1 and probably 2 of whom will be replaced by even greater libwits within a year.

    • MinnesotaRush says:

      Great post Retire .. sad part is .. IF we were to get a judgement/ruling from (who knows what it will look like in the near future – liberally slanted/stacked) SCOTUS .. what’s the remedy? How are we made whole again? How is this damage and chaos that the o-blah-blah gang has inflicted repaired?

      We’re Americans. We’ll fix it; but I fear some very, very troubling times.

    • Right of the People says:

      As an aside to all of this, our kid treasury secretary is threatening to take over Ford since they have wiggled their asses at them and said “No thanks, I think we can weather this storm without your bailout money.”

  10. retire05 says:

    MinnesotaRush, make no mistake. Chrysler is doomed, as I feel GM is. I think Ford Motor Company will be the last man standing because Ford has not taken any bailout money and even seem to be having a slight surge in sales, unlike Goverment Motors and Chrysler.

    The administration will force GM/Chrysler to make vehicles that are green, but that Americans really don’t want. Hell, if Americans wanted what those two of the Big Three were already building, they would be selling vehicles. They are not. And no amount of Obama’s tinkering, or blaming the bond holders, will force Americans to buy cars they don’t want.

    Ford long ago cornered the pickup market. And today, Consumer Reports have come out basically saying that the products made by GM/Chrysler are crap and the Ford Focus is a consumers best bet. (Ouch!)

    Companies come and companies go. The cream rises to the top. Iococca knew that and pulled Chrysler out of debt. Jack Welch knew that and built GE into the dynamo it because until Jeffrey Immelt drove it into junk bond status.

    Here is what I predict: GM/Chrysler will be forced to make green vehicles that no one wants. So in order to force the sale of those vehicles, the feds will place more and more restrictions on SUV, pickups making the cost prohibitive except for a few. But even that won’t work, so to force green cars on the American public, the government will impose more taxes on gasoline, create shortages of gas (remember Carter?) which will drive up the price of gas per gallon. The best way to force Americans to do what you want is to hit them in their wallets.

    Obama is blaming the bond holders by calling them “hedge funds”. While that is true in part, it is only a small part of the truth. I hold GM bonds in my IRA. I am not a “hedge fund”. But he got slapped by the investors who expected the promised return on their investments and he does not take defeat graciously. He wanted these investors to take getting hosed because that is how he wanted them to act. They said “no”. Remember, Diamler Benz cut their ties to Chrysler because they understood Chrysler was going down the tubes and they didn’t want to be on the hook for the cost.

    Obama was trying to cover for the UAW. He got punked.

    • JohnMG says:

      I couldn’t argue with a single point you’ve made Retire. The only thing you left out is that Ford will be looked upon by Obama as a defiant upstart. Ford will be “regulated” into obscurity for refusing to roll over and play dead in obesiance to this thug.

      Promote capitalism? Such behavior must be punished, so the beatings will continue until morale improves!

    • Right of the People says:

      The irony of all that with the green vehicles is Government Motors is going to divest itself of Saturn ASAP and they are the only division of GM with any marketable hybrids except for the Cadillac Escalade. Barry sure knows how to run a business, doesn’t he?

    • catie says:

      That’s why I was a bit shocked that they jettisoned Saturn early. I see a lot of those hybrid SUVs driving around Northern VA. Just like everything else about this man, it just doesn’t smell right.

    • BillK says:

      No, it’s Ford that’s doomed.

      Ford is running as an independent business.

      The “new” GM will be owned largely by the Federal Government.

      Who’s got the larger source of funds?

      (Hint: When Ford’s in debt, they can’t just print more money.)

  11. Liberals Demise says:

    Please let this be the writing on the wall for any other business that attempts to take money from this government:

    JUST SAY “NO” (Thanks Nancy)
    or better yet :
    “NUTS” (101st ABN @ The Battle of the Bulge)

  12. retire05 says:

    JohnMG, it won’t be the first time that Ford would be under the gun by a POTUS.

    In 1933, FDR tried to man handle Ford Motor Company by forcing Ford to join the NRA and price fix. Henry Ford told FDR to stuff it and refused. So FDR refused to by cars from Ford, cars that were needed by FDR’s immense expanse of government workers which cost the taxpayer a whopping (by 1933 standards) $169,000.00. How so? Ford’s bid to provide cars to the Civilian Conservation Corp was $169K less than anyone else. FDR turned Ford down flat trying to force Ford to comply with the NRA.

    So what did Ford do then? They continued to make a better car for a cheaper price. And although the feds were buying nothing but GM cars for the government, Ford continued to corner the market.

    That is the same attitude that stopped Ford from taking bailout money this time. In the end, when a company practices the theory of giving the consumer the best product for the best value, they will always come out on top.

    • JohnMG says:

      Good points all around, Retire. But there is a difference this time. Ford is shareholder owned now. Back in Henry’s day he refused to the forced-payment of the minimum wage. Reason? He was already paying more, on average, than that. And as owner of the company he could make that choice for the Company. And as it turned out, as frustrated as that made FDR, he needed Ford’s manufacturing capacity and expertise for the war effort to build vehicles, ships, and aircraft. Now, Obama will funnel all defense work (that that he doesn’t cancell) through G M. (Incidentally, Ford was the last of the Big-3 to unionize, and the economic forces of government were brought to bear then, also.)Now there are people who can be coerced. Stay with me here while I draw an analogy.

      I am a born and raised Catholic and my wife is a convert from the Lutheran church. Our beliefs are solid. Neither of us can fathom how people who profess to be Catholic, and who embrace the tenets of the faith, could possibly vote for an Obama after considering his views on abortion, gay issues, euthanasia, embryonic stem cell research, and a whole host of other issues. Yet they did to the tune of 67 per cent. I see these people every week in church, most of them taking Communion. How? Why? I don’t know, but what I do know is that they have sold out. I miss no opportunity to tell them as much. My point is, people often do that which they know is wrong in spite of their better judgment. As I said, people can be coerced.

      I hope Ford can buck the trend. As I’ve stated before, all of my vehicles, business and personal, are Ford’s. Even moreso will they be, now and in the future, for the reasons you list. I think they should return Obama’s one-finger salute and continue to do what is best for the country and their shareholders (pretty much one and the same thing). But with all of the forces of government arrayed against them, no one should pretend their task an easy one.

    • U NO HOO says:

      FDR had a ’36 Ford Phaeton with accessible controls.

      How did that happen?

  13. Odie44 says:

    Question for the folks here:

    Is Bambi’s meddling in GM/Chrysler – 2 out of 3 US auto makers, in violation of Sherman Anti Trust laws?

    • proreason says:

      Why do you think it would matter?

      Even the Constitution is “flawed” and an “impediment”.

      They are criminals, Odie.

      Actually, the fact that laws don’t matter to them is why they are criminals.

    • Odie44 says:

      Pro –

      While I dont disagree, it was an honest question. I choose to live my life with intergrity and within the law and don’t change course due to those around me – though am prepared to deal with said people properly, if need be.

      I think I have mentioned in the past – on a smaller, but equally important scale – former partners of mine have done some illegal crap and got away with it (some flat out criminal)… for the short term. In the end I won handsomely in a court of law, representing myself against a cabal of attorneys based on basic contract laws.

      Lesson to be learned: fight with every ounce of info and tactics available, including the law. And a good brain helps too.

    • JohnMG says:

      In answer to your question Odie, yes, I do think it’s an anti-trust violation. (See my post above.) As long as the free-enterprise market forces are left to apply, we as a citizenry, can do battle through the marketplace. But realistically, with an AG like Holder who claims that the 2nd Amendment is totally invalid, and with a hack like Obama who will back him at every turn in the road, what are the chances of winning that fight?

    • Odie44 says:

      John –

      Thank you – read your comments and in prior posts, have echoed the sentiments. I think an important distinction is – 2nd Amendment, as an Amendment can be argued ad nauseum between both sides, whereas Sherman Anti Trust falls under Federal statues of competition law or “trust” laws.. Now – the whole AIG issue clearly showed violation of basic contract law – but I think it wiser for many of us to consider a fight, rather than back away due to “difficulties”.

      I just read an interesting article in Forbes concerning “reverse discrimination” suits in favor of whites are being awarded and are gaining steam.

      One thing I have learned about the law – and lawyers is this: if they can make money (though grossly against reason, but based on laws) – they will join any fight. RICO comes to mind.

      I find the “do nothing” approach apathetic. Perhaps its the Fighting Irish in me…

    • JohnMG says:

      Oh, I’ll fight, Odie. But I harbor no illusions as to the difficulties involved.

  14. U NO HOO says:

    I’ll say it again, if Chrysler wasn’t bailed out ~1980/Iacocca’s regime, we wouldn’t be talking about this today.

    Bailouts don’t work.

    Obama, you reading this or is it true that you are a fascist?

  15. A Mad Pole says:

    Can’t find it at the moment (I think it was Chicago Tribune) but I read an article that described the whole deal in more detail. After the dust settlles, guess who will own 55% of Chrylser? U.A.W.

    Obama just repaid the union mafia for their help in carrying Michigan in November 2008, plain and simple.

  16. pharaohjoe says:

    I personally think a Chrysler partnership with an Italian maker is awesome. I’ve always wanted a car with one forward gear and 3 in reverse.

  17. badcrow says:

    So the statist thieves are going to subsidize the unions (and now a foreign company) with our tax money. When will it end? I think it will only end when the “well” runs dry. So here’s a suggestion. Never buy a Chrysler or GM product again. For that matter, just buy a used car. Stop buying new ones. There are plenty of great used cars out there. We must make every effort to keep the thieves from our money. Need a product? Buy it used, pay cash. Use all of your ingenuity to keep every available dollar out of the hands of the “G.” There are many small, simple ways to reduce the amount of money the gov’t jackals get from us. I have a dream: That every TEA partier-every free American- began to use the beauty of the free market to strike back. In my beautiful dream, millions of Americans find ways to reduce the amount of taxes the G can collect. (With all the great minds posting here, I’m sure we could come up with a list of suggestions and tips.) As tax revenues decrease, the socialists will have to jack up the rates and the system will crash in on itself. The General public will then see the true nature of their false ideology and be discredited. We all believe in the power of the Market–so let’s use it!


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