JustRalph
06-09-2009, 06:08 PM
http://www.ft.com/cms/s/0/e9b41aec-5534-11de-b5d4-00144feabdc0.html?nclick_check=1
US warns on Chrysler liquidation risk
By Bernard Simon in Toronto
Published: June 9 2009 21:43 | Last updated: June 9 2009 21:43
The US government and Fiat have warned that Chrysler could go out of business as soon as next week if the Supreme Court does not quickly reject an attempt by three Indiana pension funds to block the bankrupt carmaker’s restructuring.
The warnings are contained in filings submitted in the wake of the court’s decision on Monday to delay an alliance between Fiat and a “new” Chrysler while the judges consider whether to hear the pension funds’ case.
The funds, which hold $42m of Chrysler’s $6.9bn in secured debt, contend that an offer to pay them 29 cents on the dollar violates their creditor rights. A United Auto Workers union healthcare trust - a more junior, unsecured creditor - would receive far more favourable treatment under the restructuring, including a 55 per cent equity stake.
Chrysler’s other secured creditors have accepted the debt-exchange offer under pressure from the Obama administration’s automotive task force to consider the broader economic and social implications. But several have expressed sympathy for the Indiana funds’ position.
The Indiana funds also maintain that the government has acted unlawfully in using the Troubled Assets Relief Programme (Tarp), meant for financial institutions, to bail out carmakers.
Fiat raised doubts in its filing whether it would be willing to extend its deal with Chrysler beyond the June 15 expiry date, given the continuing erosion in Chrysler’s value.
Chrysler’s plants have been closed since it sought Chapter 11 protection on April 30. With revenues at a virtual standstill, the company is bleeding $100m in cash a day.
more at the link
US warns on Chrysler liquidation risk
By Bernard Simon in Toronto
Published: June 9 2009 21:43 | Last updated: June 9 2009 21:43
The US government and Fiat have warned that Chrysler could go out of business as soon as next week if the Supreme Court does not quickly reject an attempt by three Indiana pension funds to block the bankrupt carmaker’s restructuring.
The warnings are contained in filings submitted in the wake of the court’s decision on Monday to delay an alliance between Fiat and a “new” Chrysler while the judges consider whether to hear the pension funds’ case.
The funds, which hold $42m of Chrysler’s $6.9bn in secured debt, contend that an offer to pay them 29 cents on the dollar violates their creditor rights. A United Auto Workers union healthcare trust - a more junior, unsecured creditor - would receive far more favourable treatment under the restructuring, including a 55 per cent equity stake.
Chrysler’s other secured creditors have accepted the debt-exchange offer under pressure from the Obama administration’s automotive task force to consider the broader economic and social implications. But several have expressed sympathy for the Indiana funds’ position.
The Indiana funds also maintain that the government has acted unlawfully in using the Troubled Assets Relief Programme (Tarp), meant for financial institutions, to bail out carmakers.
Fiat raised doubts in its filing whether it would be willing to extend its deal with Chrysler beyond the June 15 expiry date, given the continuing erosion in Chrysler’s value.
Chrysler’s plants have been closed since it sought Chapter 11 protection on April 30. With revenues at a virtual standstill, the company is bleeding $100m in cash a day.
more at the link