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Chrysler preparing for bankruptcy: WSJ

Source: PTI
April 24, 2009 16:49 IST
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Ailing auto maker Chrysler is preparing to file for bankruptcy protection as early as next week, irrespective of whether the company reaches a deal with its lenders or forges an alliance with Italian entity Fiat SpA, says a media report.

"Chrysler LLC is preparing to file for Chapter 11 bankruptcy protection as soon as next week, whether or not it reaches a deal with its lenders or forges an alliance with Fiat SpA," The Wall Street Journal has reported quoting several people familiar with the matter.

The daily noted if Chrysler does not reach an agreement with its lenders, the firm would file for bankruptcy protection to rid itself of "some liabilities".

"That would let Fiat pick and choose which operations it wants," the newspaper said quoting these people.

The daily in a report published online said the US government would provide bankruptcy financing while the reorganisation plays out.

Further, quoting these people, The Wall Street Journal noted that the United Auto Workers union is on board with the plan and likely to end up owning a sizable stake in the restructured car maker.

"... if a deal with Chrysler's banks and Fiat cannot be reached, the company would begin the process of liquidation, with assets potentially sold to many buyers or shut down, said these people. Chrysler has shrunk radically in recent years but still employs 66,000 people in the US," The Wall Street Journal said.

American auto makers have been severely battered by the ongoing financial turmoil and Chrysler and General Motors are among the worst hit.

"A Chrysler bankruptcy filing, while long expected by some, would nonetheless represent a watershed moment in Detroit's long decline as the first such move among the once-dominant Big Three auto makers. GM is working through similar issues and could be forced to file for bankruptcy in May," the daily added.

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