US carmaker Chrysler will file for Chapter 11 bankruptcy protection immediately and has formed an alliance with Fiat, President Obama has said. Marvellous…so what happened to the $4 billion bailout then Mr. President? I can only assume it’s all gone the same way as the massive losses they sustained. Brilliant decision making that.
The White House described the move as a “surgical short bankruptcy” which should last between 30 and 60 days. President Obama said the “necessary steps” had been taken to give Chrysler “a new lease of life”. He added that he had “every hope” that Chrysler will become “stronger and more competitive” now that it had Fiat on board. “It’s a partnership that will give Chrysler a chance not only to survive, but to thrive in a global auto industry,” he said.
The filing for bankruptcy protection will lead to the forming of a new corporate entity.
Fiat’s technology will enable Chrysler to build fuel efficient cars
Details of the new Chrysler include:
• Fiat will take a 20% stake, with the possibility of it rising to 35%
• The Treasury will have an 8% stake, a union-run trust fund VEBA will take a 55% stake, and the governments of Canada and Ontario will gain a combined 2% stake
• Current owner Cerberus will forfeit its 80.1% stake
• Daimler will give up its remaining 19.9% stake in Chrysler
• Chrysler bondholders will receive $2bn in cash in exchange for forgiving their $6.9bn debt.
Just who is the 101 day old President kidding? This isn’t the solution to the problem…and nor is throwing more money at it. Frankly, it’s ridiculous.
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