The main reason behind this development is, as we are sure you know by now, the failure of both Chrysler and the US Treasury Department to convince the company’s lenders to accept the cash-for-debt swap.
Under protection, the U.S. will provide up to $3.5 billion in debtor-in-possession (DIP) financing and up to $4.5 billion in exit financing. As for how long the bankruptcy will last, President Obama says, or rather hopes, it will not take more than two months.
Chrysler’s CEO Robert Nardelli will take his leave from the position he currently holds within the company after the emergence from bankruptcy. The new board will be appointed by the U.S. (six members) and Fiat (three members).
This is another confirmation that the deal with Fiat will still happen. Even more so, the Italian manufacturer may get the majority stake after the loans granted by the US to Chrysler are repaid, Reuters reported.
"Bankruptcy is what they have been headed for in the past several months," Mirko Mikelic, portfolio manager at Fifth Third Bank told the source. "The biggest concern now is that the different stakeholders will be able to make the tough decisions they need to make."
Today’s developments mark the end of Chrysler as we have come to know it. Nothing will be the same for the automaker and the people involved with the it after it exits bankruptcy protection. Whether it will be a better company or not, this is yet to be determined.
Goodbye, Chrysler! And welcome!