Chyrlser soon to file for bankruptcy
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- InformedTexan
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US carmaker Chrysler will file for Chapter 11 bankruptcy protection, President Barack Obama is to confirm.
The White House described the decision as a "surgical short bankruptcy" which should last between 30 and 60 days.
Mr Obama says that his administration had "worked very hard to avoid this", but not all of Chrysler's lenders were willing to participate in the deal.
The number of Chrysler dealers will decrease over time, but no jobs will be lost in the short term, he adds.
The bankruptcy will be filed in New York.
The US government had told Chrysler it would be given a further $6bn (£4bn) of vital state loans if it had successfully restructured the business by midnight.
This included trying to persuade the firm's main lenders to accept $2bn in cash, in exchange for writing off all of Chrysler's $6.9bn secured debt.
While Chrysler's main banks, holding 70% of the debt, accepted this proposal, it was reportedly rejected by hedge funds that hold a sizeable proportion of its remaining debt. Hedge funds are private investment funds that typically attract rich private investors.
The White House official accused the hedge funds of a "failure to act in either their own economic interest or the national interest".
He added that their rejection of the deal would not impede "the new opportunity Chrysler now has to restructure and emerge stronger going forward".
The White House described the decision as a "surgical short bankruptcy" which should last between 30 and 60 days.
Mr Obama says that his administration had "worked very hard to avoid this", but not all of Chrysler's lenders were willing to participate in the deal.
The number of Chrysler dealers will decrease over time, but no jobs will be lost in the short term, he adds.
The bankruptcy will be filed in New York.
The US government had told Chrysler it would be given a further $6bn (£4bn) of vital state loans if it had successfully restructured the business by midnight.
This included trying to persuade the firm's main lenders to accept $2bn in cash, in exchange for writing off all of Chrysler's $6.9bn secured debt.
While Chrysler's main banks, holding 70% of the debt, accepted this proposal, it was reportedly rejected by hedge funds that hold a sizeable proportion of its remaining debt. Hedge funds are private investment funds that typically attract rich private investors.
The White House official accused the hedge funds of a "failure to act in either their own economic interest or the national interest".
He added that their rejection of the deal would not impede "the new opportunity Chrysler now has to restructure and emerge stronger going forward".
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AveryMoore
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One solution I'd like to see.
Buy out the hedge funds, fire Chrysler's top management, hire people who do know how to make and sell cars that don't fall apart, keep the employees, and go get competitive again.
Funny thing about cars, when we still competed hotly to gain public favor sales soared.
When advertising and PR made it possible to sell promises and excuses instead of what consumers wanted - solid value for what they paid to get - the industry tanked and now is on life support.
Let's just make real cars from now on. Not dinosaurs and money pits. We did better before with brains and applied science - now that's impossible? Says who?
- 3 years ago
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AveryMoore
