30 Years Later: A Belated Chrysler/GM Bankruptcy
I am in Philadelphia today, speaking at my friend David Kotok’s The Financial System, Banks & Economy: After the Storm…Where Are We Now? conference, and I may just have to throw away my notes and wing it to speak about the Chrysler bankruptcy . . .
“President Barack Obama aims to announce [Thrusday] that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA, people involved in the matter said.
Administration officials are still resolving outstanding issues, and the plan isn’t finished, said one of the people, who declined to be named because discussions are private.
As part of negotiations, the U.S. Treasury raised its offer to Chrysler’s lenders to $2.25 billion in cash to forgive $6.9 billion in secured debt, two other people familiar with the matter said. The previous offer had been for $2 billion in cash.”
In the latest proposal, the UAW would (eventually) own 55% of the stock in a restructured Chrysler under a deal reached by the two. Fascinating.
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Source:
Chrysler Chapter 11 Is Imminent
NEIL KING JR. and JEFFREY MCCRACKEN
WSJ, APRIL 30, 2009
http://online.wsj.com/article/SB124102375931669205.html
Obama Said to Plan for Chrysler Bankruptcy, Alliance
Mike Ramsey and Christopher Scinta
Bloomberg, April 29 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDJS94V_Uzgc&
April 30th, 2009 at 7:38 am
What does it mean that “the UAW” would own 55% of the restructured company? Does that mean the union, as a corporate entity, or the retirees…? (Do bank employees have a union?)
April 30th, 2009 at 7:38 am
It’s morning in America… again
It suddenly appears both Chrysler and GM may very well skate by without bankruptcy.
The nationalization of Citi and some other big banks that was considered a certainty a couple months ago has evaporated. Roubini and others had recommended triage of the most insolvent banks, but that appears unnecessary now.
GS is back.
BOA says the MS purchase is “paying off” now.
If Greenspan was the Maestro, then Ben will soon be known as the Miracle Worker, and Timmy will be the greatest Treasury secretary since Hamilton.
April 30th, 2009 at 8:16 am
@KJ: Ha. I just used that phrase myself in a similar tongue-in-cheek comment to Jack McHugh’s post. Comparing Timmy to Hamilton seems appropriate, but who is Jefferson?
April 30th, 2009 at 8:23 am
lb,
in this go-round, Jefferson was on the one that was Shot.
April 30th, 2009 at 8:35 am
Personal income and spending are down.
Continuing claims still rising. Savings up 4.2%. Hmm…
April 30th, 2009 at 8:40 am
do we have a march to 930 or will we have a reversal?
April 30th, 2009 at 8:44 am
So how does the UAW negotiate in good faith with Ford and GM in the future? With majority ownership of Chrysler, they’ve got the incentive to wreck their domestic competitors with labor strikes.
April 30th, 2009 at 8:55 am
sorry KJ- looks like its bankruptcy-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYtIvhnkXHn4&refer=home
April 30th, 2009 at 8:58 am
I am not sure that equity markets have priced in the consequences of the Chrysler bankruptcy and the resulting unemployment. Add in the fact that GM is essentially going to close for the summer and it’s hardly a mustard seed. There are going to be a few more large restructuring and dismantling events coming down the pike. Yeah, (C).
They are buying FSLR and AKAM this morning like it’s 1999. Surely, more pain for the retail investor is just around the corner. The easy money was made in March.
April 30th, 2009 at 9:05 am
OT:
lb,
as an aside, just to let you know, there was no helping that Sentence construction, it was too far gone..
April 30th, 2009 at 9:09 am
I have a feeling that today may be a rather interesting and pivotal day, one way or the other.
OT:
Prof Hoffer: It may, indeed, be a very long time before franklin411 receives his higher degree.
April 30th, 2009 at 9:18 am
I saw in the news that Chrysler is #3 employer in the US, wow, still! I think the bondholders will convince the BK court that liquidation is the way to go, sell Jeeps and the parts businesses and let Fiat pick up a couple newer assembly sites, dump the retirees into PBGC black hole and the laid off workers on overwhelmed states.
Detroit homes which now have an avg val of $5800 will be completely abandonable.
April 30th, 2009 at 9:21 am
The other day I was talking to Lee Iococca and he says
April 30th, 2009 at 9:24 am
I wonder if this will be seen by much of the public as Obama standing up to the Hedge Funds/Ivestment Banks/Wall Street types. The analogy would be Reagan standing up to the Air Traffic Controller Union?
April 30th, 2009 at 11:32 am
just watched Maria’s report on the bond holders of this Chrysler situation and the 55% UAW stake .. before that the on location Belvidere / Rockford car assembly plant report with the 4000 employees waiting with baited breath …. whos on first – who gets sploppy 2nds … the bottom of this problem is way back, offering & accepting future payment retirement benefits that were put into an account/pot that was used to buildup foreign competitors and now the payback feature is gone … from Wall Streets pov and legally – workers future promised paybacks are sloppy 2nds … legally maybe but Not Right
I remember days in that plant … and at SMW#1 meetings “put it on the check”"na invest in our retiirement via pros”"put it on the check where its safe”
20/20 hind site .. ask for just enough and trust SSI for old age
April 30th, 2009 at 12:39 pm
not sure why any one expects there to be buyers for the plants. after all Toyota just built a brand new plant, and put into moth balls before it built a single vehicle (it was going to build an SUV and then it was going to build Priuis). some body might be interested in the equipment in the plants, and it would likely be China where that equipment ends up. And the dealers will be toast, along with the finance company.
April 30th, 2009 at 2:49 pm
been watchin the PowerLunch gig outta the Madison Ave crowd .. another bunch of crowd pushers …. pirates pirates everywhere .. imo its time to go into a paperless cashless society – no more powerplays .. then pirates have nothing but real things to trade for / with … lawyers and accountants and traders and advertising hucksters start gettin your hands dirty and build up some callouses and learn what givin up a lung or a finger feels like (typers carpal tunnel – what a waste) .. time to build real things for a living and say bye bye to this paper society .. in this educated global society – paper ain’t workin …. when we don’t need ya – either we build another factory to have you show up at and reduce the workload for others .. or you hit retirement .. but ya don’t go hungy because your excess baggage …. mergers & acquisitions / to big to fail is anti-matter Wall Street speak for paper pusher efficiency job security
added benefit in paperless society .. illicit drugs and prostitution .. learn to grow your own and woo again or do without … come on Conservatives – you with me?
May 1st, 2009 at 9:57 am
on Charlie Rose last night Apr 30, 2009
A conversation with author Joshua Cooper Ramo “The Age of the Unthinkable” sub “Why the New World Disorder Constantly Surprises Us And What We Can Do About It”
Folks .. I’m not a lone thinker/supposer on what ifs to advance society down the long road
also
A conversation with Tung Chee-hwa, Former Chief Executive of Hong Kong
A discussion about Chrysler’s bankruptcy plan
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