Time Is Running Out For Chrysler! Bankruptcy "95% Certain"

With a week to go before the deadline runs out on Chrysler’s bailout — it’s looking less and less likely that the automaker will be saved from liquidation.

Yesterday, a report from Bloomberg described the likelihood of liquidation at 95%.

Chrysler LLC has a 95 percent probability of entering bankruptcy as time dwindles before its April 30 deadline to cut debt and complete an alliance with Italy’s Fiat SpA, an industry analyst said.

The likeliest outcome of a Chrysler filing for court protection would be the purchase of some factories and brands by automakers including Fiat, said Michael Robinet, head of global forecasting for CSM Worldwide Inc. in Northville, Michigan.

“Nobody has a good idea about what’s going to” exist of the third-largest U.S. automaker once it goes into bankruptcy, Robinet said in a speech today in Detroit.

The bleak news came after lenders rejected an offer by the Treasury department that would have reduced Chrysler’s debt. Now a new offer is on the table. The latest word on the deal comes from the Wall Street Journal:

The Treasury now proposes that the banks and other lenders accept as payment 22% of the $6.9 billion they are owed plus a 5% equity stake in Chrysler, said several people familiar with the matter.

That’s up from an earlier Treasury proposal that the banks and other lenders accept 15% of what Chrysler owes them and receive no Chrysler stock.

Chrysler’s lenders, including JP Morgan Chase, and Citigroup, rejected the first offer and proposed that Chrysler pay back 65% of it’s debt as well as offer a seat on its board.

Banks Get New Offer for Debt in Chrysler [WSJ]
Chrysler Bankruptcy Now 95% Certain, CSM Analyst Says (Update1) [Bloomberg]
(Photo:Ralph Krawczyk Jr)