Featured Articles

Chrysler To Declare Bankruptcy

Posted in auto industry, Car Buying, Chrysler, Dodge, Fiat, General, Jeep, Newsworthy, Politics, Press Release by Nathan Redden | April 30th, 2009 | Leave a Reply |


Well it’s official, Hail Mary incomplete. In a last minute effort to woo stakeholders into concession, Chrysler fell short of its Wednesday night deadline to stave off Chapter 11. Of 46 original holdouts earlier in the day, it all came down to three: Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital. The Obama administration will assist Chrysler with a “surgical” bankruptcy filing. The goal is to make some quick concessions with suppliers and debtors, shed a large chunk of the dealer network and orchestrate an acquisition by Fiat. Did I mention they want it done in 60 days? Quick reminder: Delphi entered bankruptcy in October of 2005. They have yet to emerge.

Now this is certainly an unprecedented move. Chrysler will be playing the guinea pig, and you’d better believe GM will be watching closely. No major automaker has ever entered and recovered from bankruptcy. It’s either liquidation or acquisition. Some analysts point to the airlines as an example of Chapter 11 recovery, but there are a few faults with this comparison. Once you’ve returned from your Tahitian escapades, your plane ticket is torn up and your financial relationship with an airline is done. This is far from the case with automobiles. Customers have reason to be concerned with warranty, service, dealer relationships and residual value. Though the situation will be similar with GM, its sheer size and scope lends itself to the greater possiblility of recovery. Can the Italians succeed where the Americans, Germans and Wall Street hedge funds have failed?

Look, if it gets the Fiat 500 here in the end it will all be worth it.

Our Best Articles

Leave a Reply

Your email address will not be published. Required fields are marked *