President Obama announced today that Chrysler would seek bankruptcy protection and enter into an alliance with Fiat. The president told reporters that a “small group of speculators” made up of hedge funds and other investors held out in the hopes that the US government would bail them out. That didn’t happen.
The NYT has the numbers:
A senior White House official said that the case would begin immediately, and that the government would provide debtor-in-possession financing in a range of $3 billion to $3.5 billion, so the company can continue to operate normally.
Once Chrysler restructures, the company would receive $4.5 billion in financing to restart its operations, for total American government support through the bankruptcy process and afterwards of up to $8 billion.
That is $2 billion more than President Obama initially said the company would receive if it successfully reached a deal with Fiat.
Chrysler has already received $4.5 billion from the government, under a bailout plan put into effect by the Bush administration in late December, after Congress rejected legislation that would have provided federal aid.
The Canadian government also is expected to provide $1 for every $3 in American support, the official said, meaning Chrysler could receive another $2.6 billion.
Obama encouraged American consumers to continue to support Chrysler, emphasizing that it would be business as usual during the bankruptcy proceedings — which are expected to be as short as 30 days.
For those consumers concerned about buying a car from a bankrupt automaker, the president promised that Chrysler warranties would be fully backed by US government.
The WSJ says the holdouts, calling themselves “Non-TARP Lenders,” claim that their attempts to restructure the company’s debt were “flatly rejected or ignored.”