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.
05/13, 12:11 PM
posted by:
carstuff
Oh, I love this now. Perhaps the government will not have any of the good Chrysler and they will not be running it?
Will the bad Chrysler build anything or have any income?
05/13, 12:17 PM
posted by:
wbent
Its all smoke and mirrors, never mind the person behind the curtain.
05/13, 12:28 PM
posted by:
mulletmaster
Fiat should have to take the good, the bad and the ugly in this deal. Thanks for shoveling tax dollars into a black hole asshats.
05/13, 12:54 PM
posted by:
CarCzarCdn
Sometimes I don’t think people pay attention….New Chrysler = 20% Fiat, 8% US Gov, 2% Canadian Gov, 55% UAW, and 15% being held as a carrot for Fiat to win over the next few years as they meet certain requirements.
Bad Chrysler is all the stuff they don’t want to keep that gets liquidated and divided up between all the creditors including the Government. The Government gets part of the liquidated assets as well as ownership in the New Chrysler, which at some point they will sell to Fiat at Market Value.
05/13, 12:58 PM
posted by:
CarCzarCdn
P.S. That ACR Viper is just so bad a** looking……I’m really going to miss that car.
05/13, 1:01 PM
posted by:
CarCzarCdn
I think that the Union should be forced to keep at least a 45% ownership in the company when all this finally shakes out in a few years. Employees that own the company they work for, work a hell of a lot harder and put more heart in to it.
05/13, 1:23 PM
posted by:
johnnycanuck
This whole thing reminds me of one of those colon cleansing diets. The only difference is in this case they’ll have to look in the bowl before they flush and It is not going to be pretty.
05/13, 1:35 PM
posted by:
Hyperion
The Viper is now a “bad” part of Chrysler? I don’t think they had any trouble selling those cars to their intended customers. Perhaps the Obama administration simply hates the very intention the Viper stands for. For shame, because it’s not like every family looking for a new car with decent fuel economy is going to be in the market for one of those monsters.
05/13, 1:45 PM
posted by:
ninetysixvert
The Viper is only “bad”because it’s being discontinued.
In the coming years it should turn out to be 43% Fiat, 2% Canadian, and 55% UAW? Where did that come from? And what happened to the percent Cerberus had?
05/13, 2:00 PM
posted by:
CarCzarCdn
Cerberus and Daimler both gave up all their shares in Chrysler and cancelled any debts owed to them to make this happen. The Canadian Gov. has agreed to keep their 2% for a minumum of 2 years and then they plan to sell those shares to the highest bidder. The CAW has announced that they have no intention of keeping their 55% past two years either, and will sell them off.
05/13, 2:03 PM
posted by:
CarCzarCdn
Funny thing about the Viper, is that no one has actually come out and said that it is being cancelled. The Media is assuming it’s gone, because the factory that currently makes it is being closed and sold. There is no reason they can’t move production to another under utilized plant. They only build approx. 1500 Vipers a year and it’s a fairly profitable business.
05/13, 2:20 PM
posted by:
JakeK66
I don’t get the part where the plants are worth $2.3 Billion. If no one wants the plants, they are worth NOTHING! I know – there’s a abandoned Ford plant not far from me that built Explorers and I have yet to hear of one interested party EVER!
05/13, 3:32 PM
posted by:
Borat
Jake,
There was Ford plant not far from me that used to build medium trucks in NJ and it is demolished (I reckon it was environmental disaster like everything in my Garden State) and land is unoccupied for the past 10 years. Some value there.
05/13, 5:27 PM
posted by:
Mutant@DCX
Viper factory [Conner Assy] is just 4 walls, there is nothing special about it. No special machinery, no paint. Penske can build this car anywhere!
05/13, 8:24 PM
posted by:
beatusmongous
Of all things Chrysler, I’m going to miss the growl of the Viper most.
05/14, 10:59 AM
posted by:
militarydave
well if the issue is the CAW and UAW, hell, send them to Mexico. They’ll build em. eventually they’ll have a MAW, but thats years away. Ford seems to be ok down there, so is nissan, vw, mercedes, renault, etc.
and yes, the Viper will be missed. we can only hope someday it will make it’s return!
05/16, 1:38 PM
posted by:
saabaru1
Didn’t they have grand plans to sell Viper off as a brand? Anybody know yet how much Cerberus lost by buying Chrysler? Didn’t they buy it for debt equity too? I’d like to get the whole story, I almost feel bad for them, they got it pretty hard by our own govt… Ahh the endless foreskin of government…
…I mean, foresight.