Report: Chrysler met with law firm Jones Day to discuss bankruptcy
12/05/2008, 3:21 PM
By Drew Johnson
Although Chrysler is still optimistic that Congress will hand down the $7 billion it needs to survive in the short term, the Michigan automaker hasn’t left itself without a ‘Plan B’. Chrysler reportedly used the international law firm Jones Day as a bankruptcy counsel earlier this year.
According to The Wall Street Journal, Chrysler met with Jones Day several weeks ago, presumably before the automaker went in front of Congress.
Chrysler, along with the rest of the Big Three, is in Washington D.C. this week asking for federal aid to the tune of $34 billion. Chrysler has requested $7 billion of that figure by January 1st, a total the automaker says it needs to survive.
If Congress decides to pass on the Detroit bailout, Chrysler would undoubtedly have to fall back on bankruptcy, a move that would like tailspin the Michigan automaker into Chapter 7 liquidation.
However, even it’s not completely out of the realm of possibilities for Chrysler to secure government funding and still wind up in Chapter 11 bankruptcy. One possible scenario from Capitol Hill would see Chrysler only landing a bridge loan if it agreed to a pre-packaged bankruptcy.
Whatever the case, the move shows that bankruptcy is a very real possibility for Chrysler.
12/05, 3:50 PM
posted by:
Lariat Luxury Locomotive Liner No.3
Of all the Big 2.000001 Chrysler is a privately owned company (by tactical financial dogs) and today they were questioned, more than the others, about getting their own funds. The writing is on the wall—Chrysler is kaput. They had better be drafting bankruptcy papers now.
12/05, 3:53 PM
posted by:
TomF
Yup. Those schmucks got into Chrysler to exploit it and make billions, not because they loved cars or took pride in American industy. Now they’re eating it. Live by the sword, die by the sword.
12/05, 4:02 PM
posted by:
johnnycanuck
Lee Iacocca admits the worst decision he ever made was to turn the reigns over to Bob Eaton who ultimately made the deal with Daimler.
Also interesting to note is that Viper sales are up 162% this year- over a thousand units. I highly doubt that’s just due to gas being cheap again.
12/05, 4:07 PM
posted by:
JakeK66
Buy Your Challenger Now While They’re Still Hot! You won’t see a new one again, so if you are interested in one, I’d really go out and get one that’s discounted now… It really maybe a collectors item. At least the RT and SRT-8 versions anyway.
12/05, 4:09 PM
posted by:
JakeK66
Oh, and the fact of their being a Democrat President and a 35 MPG CAFE standards coming into play.
12/05, 4:35 PM
posted by:
yarddog82abn
THE UAW HEADS LOOKS PISS…
Under Chapter 11 bankruptcy, ALL Union Contracts can be dismiss…
American Air lines and Delta airlines broke off there contracts with the pilots union more then twice, and the unions took them to court and lost, twice!
Look at the bright side UAW members now you don’t have to hang out all day at a bank job for 95% of your pay plus benefits, now you just go down to the employment office for 2 hours and 50% of your pay with no benefits, hay you get to spend more time at home…
12/05, 5:43 PM
posted by:
mayer_ray_nagin
Guess the UAW should have kissed some GOP butt along the way.
12/05, 5:55 PM
posted by:
howsmydriving
When Cerberus took over Chrysler, there was speculation about whether they would “strip and flip.” I think that they sincerely wanted to make a go out of being a car company. As between Ford and Chrylser, I’d much rather see Ford go away but that’s not going to happen.
12/05, 8:53 PM
posted by:
Lariat Luxury Locomotive Liner No.3
@howsmydriving, one of Cerberus’ traits is secrecy as they have been know to flight a fleet of jets through legal loopholes (financial and otherwise) to get where they are today. I doubt that Cerberus’ true intentions for Chrysler will ever be revealed, but they assuredly did not forecast this turn of events. There are parts of Chrysler still worth the goodwill value that they have earned, and someone out there might pickup these pieces.
12/05, 9:09 PM
posted by:
elviososa
Let the Ford go away??? I would like to see GM goes away.
12/05, 10:21 PM
posted by:
wreckchaser
From the Chrysler web site:
CHRYSLER LIFETIME POWERTRAIN WARRANTY CUSTOMERS — Q&A
# Q15: What does ‘lifetime’ mean?
# A15: Lifetime means lifetime.
Would Chrysler have to honor their lifetime warranties?
12/05, 11:57 PM
posted by:
sequoiatrader
There are reports that Chrysler’s problems have been accelerated by an error in their checkbook register. Apparently Bob Nardelli forgot to account for a check he wrote for the Chrysler Christmas Tree. As a result some of the checks he wrote to pay bills have bounced. Reports say that Chrysler has received a 3 day notice on their electric bill as well as their phone and water bills. The problem is that if their utilities are cut off they will have to come up with huge deposits to have them turned back on. That would be catastrphic during the holidays in light of all of the gift buying they had planned on doing. Sources say the UAW has asked the Santa Claus at the Detroit Mall for a new bicycle, Nintendo Wii and a pony for Christmas. Chrysler is presently in talks with Cash Advance America about a payday loan to help ease through these tough times. Fortunately, they have had the Wii on lay-away for six weeks at Walmart and only owe about forty dollars more on that account. There are also rumors that Chrysler may have been trying to pawn their entire inventory of PT Cruisers at a pawn shop in Philidelphia. They showed the pawnbroker the invoices of the units they were trying to pawn hoping to get thousands of dollars to which the pawnbroker replied, “In Detroit the invoice of a PT Cruiser may be ten thousand dollars but In Philidelphia they are worth fifty bucks.”
12/06, 11:11 AM
posted by:
The Stig
The problem with Chrysler aside from piss-poor product quality is Nardelli and Cerberus. Certainly Cerberus will have increased access to capital as a result of the 700B banking bailout. So if Chrysler gets it’s own “loan” of sorts that is tantamount to double-dipping by Cerberus.
12/10, 11:58 AM
posted by:
jackjimturkey
You’re never as rich as when you’re bankrupt