Chrysler has hired bankruptcy firm Jones-Day, sources say.

WSJ: Chrysler several weeks ago hired the prominent law firm of Jones Day as bankruptcy counsel, suggesting the auto maker is preparing for imminent financial failure should its efforts to obtain federal rescue funds fall short.

Gee, I wonder if that will put any pressure on Congress . . .

Category: Bailouts, Legal, Markets

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27 Responses to “Chrysler Hires Bankruptcy Firm”

  1. karen says:

    As for GM, Marty Chenard of points out that “The Government could buy all the stock and own the company for only 2.99 billion dollars instead of giving them a loan for 18 billion.”

  2. John Borchers says:

    It’s all part of the show.

  3. Mannwich says:

    I’m sure Bob Nardelli (who bagged $200MM in severance after ruining Home Depot) will do just fine either way with his little golden parachute payout…..

    And then he’ll walz over to another giant, failing company, put a fork in them and collect once again.

    Lather, rinse, repeat. Lather, rinse, repeat.

  4. Winston Munn says:

    Why is it that the companies of the Military Industrial Complex never seem to face these problems – I guess if you build weapons that every man, woman, and child wants and needs, you can’t go wrong….

  5. bonghiteric says:

    If I was Gordon Bethune I’d just want to donkey-punch these pussies.

  6. willid3 says:

    and why is it that Cerebus isn’t investing in their own company? they seem to be at the crux of a lot of these car company problems, they own the majority of GMAC causing GM no end of grieve (dropping from 50% of sales to 6% is not a small drop off), and they own Chrysler financial, I bet they are doing the same thing there. so when they get a loan, maybe the loose control of all of these (and the income from the companies if any) to?

  7. RW says:

    Interesting game of chicken the Beg 3 (love that term) are playing.

    Still not sure what Ford’s game is though: As far as I can tell they’ve got enough cash for another year of bad news if needs be, and if the other two go under or are broken up, their market share should improve. Is the supply network really so intertwined or convoluted that Ford could be damaged by a failure of the other two or is there some other issue at work?

  8. wally says:

    Call the bluff. Let them file; I don’t give a rip.

  9. john haskell says:

    @Mannwich- Home Depot earnings doubled while Nardelli was CEO. Or ‘he ran it into the ground,’ whatever. BTW why would a $35bln private equity fund hire a guy who ran his previous assignment into the ground? Try thinking next time.

    willid3- would you invest in Chrysler right now? As for ‘dropping from 50% of sales to 6%” what on earth are you talking about? GM last had 50% market share in the 1950′s. Feinberg wasn’t even alive then, much less running Cerberus or GMAC. Get spellcheck and a grammar school education while you’re at it.

  10. John Borchers says:

    Pres Bush will clear ride the autos over the weekend. Just like Citibank. If he doesn’t the system tanks. It’s that simple so you have to bet for it.

  11. deanscamaro says:

    If they’re not pulling in some bankruptcy expertise, they are just as unconcious as they were the first time they were there, riding in on their private jets. To hear them tell it, they are on the verge of bankruptcy. Why wouldn’t all three of them have some bankruptcy expertise if things are really that bad? Put the requirements and controls that must be met (wages/benefits/layoff pay/etc. comparable to the rest of the industry & make the board hire new management) to get the money, make them report in with progress as time moves along and throw them in the bankruptcy pit when they don’t meet the requirements.

  12. Mannwich says:

    @john haskell: Spare me your lecture. Try reading beyond the numbers. They DO lie from time to time or at least don’t tell the real story………they got rid of him because the place was an utter mess by the time he left. Whose fault is that?

    “BTW why would a $35bln private equity fund hire a guy who ran his previous assignment into the ground? Try thinking next time.”

    Because he was a hatchet man and cost cutter for the purpose of SHORT TERM gain for himself and the shareholders at the expense of everyone else. Do a little research please. He’s the classic case of the egotistical “me-first” CEO who ravages a company for his own gain and then watches the wreckage from a far long after he’s bailed. Sound familar? (ahem, Jack Welch, Sandy Weill, etc.)

    The sign of a great CEO is leaving a solid company behind that can endure for the long term. Did Nardelli do that? I think not.

  13. willid3 says:

    John Haskell, i was talking about the number of sales that GMAC was the lender, not GM’s market share. up until about a couple of months ago, GMAC (as it true of most captives) was a big player in retail loans (after all thats the reason they exist at all). but since GMAC has had major funding issues unrelated to auto financing, they seem to have cut that business big time.

    I have seen where their are rumors that if Congress does nothing that they might just shutdown their US operations, and move to some offshore tax haven.

  14. Mr Beefy says:


    Donkey Punching is always recommended! it’s the +EV move to make! :).

  15. Theodore D. says:

    Since when did Jones-Day(and nights and weekends – as we like to call it) become a bankruptcy firm? They are more name then anything else. They’ll take any client that happens to show up at there door. In Cleveland they are “helping” the city file a “Nuisance” complaint against many of the banks for loaning money to people who they knew couldn’t pay it back. The taxpayers are paying their Genormous fees for a case that has a ZERO% chance of even getting Cleavland $1. Jones-Day is not a bankruptcy firm they are a firm with an impressive name. Its like hiring a guy Harvard over everyone else not because he is more talented but just because his resume says Harvard. If this were anything but a political maneuver they would have hired a firm that deals exclusively with corporate bankruptcy and not just the firm with the most impressive name.

    JD’s business model revolves solely around greed. They’ll take any and every client – they chew through associates faster than every other firm, and the premium you pay does not justify the work you get. They are successful because no one ever got fired for hiring JD over someone else.

  16. DL says:

    There’s no question that the auto companies get some money before January 20th (and probably before 12/31/08).

    The question for traders is whether or not there will be a temporary standoff among the politicians that causes the market to tank for a few days. I think there’s a significant possibility that that will happen.

  17. John Borchers says:

    DL I doubt they jerk around any more like they did last time. They almost tanked the market and everything with it.

  18. DL says:

    Another one of those days: S&P up 2%, oil down 4%

  19. DL says:

    John Borchers @ 2:53

    So Bush is just going to give Pelosi whatever she wants?

    My question is, will the money come out of TARP, or will it come out of the $25B already allocated for “fuel efficient vehicles”…?

  20. John Borchers says:

    Bush will change his mind after the 500K job loss news. He has too.

    I would hope Congress puts something in the bill to give US people credit for purchase of US autos in the future too especially for ones made in the US. No credit for anything imported or not made here.

  21. DL says:

    John Borchers @ 3:02.

    Bush may also say that he’ll be happy to let them use the money already allocated for fuel efficient vehicles.

    * * * *

    “I … hope … people [get] credit for a purchase of …. autos …made in the US”.

    Fine. I’ll go buy a Toyota made here in the U.S.

  22. LFC says:

    Chrysler should have been allowed to die nearly 3 decades ago.

  23. JustinTheSkeptic says:

    What a beautiful day! Time to get Bullish…when you start hearing the word “worst,” in rapid succession you know that it’s the bottom. Good luck Bears but I’m otta-here!

  24. Theodore D. says:

    Justin the contrarian – do you think the December employment numbers are going to help like the November numbers supposedly did?

  25. Yeah, it’s too bad such sneaky, back-handed coercions are the order of the day. Unfortunately, none of these auto execs has the nuts to inform Congress it was their reckless regard for principles put forward in the U.S. Constitution’s Preamble that put the economy in its presently vulnerable position in the first place.

  26. Micah says:

    A little disclaimer… I can not predict the future nor do I know what will or will not happen if the Auto-industry is left to fend for themselves.

    My biggest fear in all of this is that by not doing something we may find ourselves in some real trouble. Things are bad now and but letting this situation cascade further can’t be good. The interconnected nature of the economy on both a national and global scale makes it impossible to predict (but not impossible to pundit). There is one thing we can always count on… The poor will fair the worse in this. Lack of education, skills, connections and mobility will prevent a smooth transition for these people. The more wealthly, educated and powerful will land on their feet, especially those individuals responsible for this mess.

    On a happier note: I find it ironic that I’ve known individuals who have been very flippant about other people’s problems and then cry like Nancy Kerrigan (nothing against her) when they find themselves effected. It is sometimes good to remember that when making the decision to not support a bailout.


  27. DL says:

    Micah @ 5:15

    Who’s going to bail out the U.S. when the national debt gets to be 15 trillion?