The ‘good’ Chrysler may emerge from bankruptcy in just two months, but a new report confirms the ‘bad’ Chrysler could languish in bankruptcy for up to two years. Reports surfaced weeks before Chrysler’s declared bankruptcy that the Michigan automaker could be stuck in bankruptcy court for years.
One of President Obama’s officials revealed to Bloomberg on Wednesday that parts of Chrysler will likely remain in bankruptcy for two years. The good parts of Chrysler will be sold to a new entity lead by Fiat in the coming weeks, but the so called bad Chrysler will be kept in bankruptcy for up to two years as creditors and other interests fight over the automaker’s remaining assets.
“The unsold assets and liabilities may take years to sort out due to the complexities of resolving thousands of commercial, tort, future asbestos, dealership and employee claims,” Martin Bienenstock of Dewey & LeBoeuf LLP told Bloomberg.
The old Chrysler will be forced to deal with loads of debt, product-defect cases and even claims dealing asbestos damage.
The main focus of the bad Chrysler will be its eight abandoned factories — including the Dodge Viper’s Detroit plant. Those factories are estimated to be worth a combined $2.3 billion – well short of the bad Chrysler’s debt of $9.4 billion. Roughly $4.5 billion of that debt belongs to the U.S. government.
