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Business site Bloomberg has reported that US President Barack Obama will announce later today that Chrysler will be placed in Chapter 11 bankruptcy, and will implement an alliance with Italian carmaker Fiat.
Under that deal, Fiat would own 20 per cent of Chrysler, with the American and Canadian auto workers’ unions owning 55 per cent and the remaining 25 per cent being held by the government.
The reports come after a leaked memo to Chrysler employees from the carmaker’s chief executive officer Bob Nardelli, saying the company was waiting to hear whether its 46 main creditors would accept $2 billion to wipe out $6.9 billion in secured debt.
However Chrysler Australia spokesman Jerry Stamoulis says reports of the bankruptcy are premature.
“The bankruptcy rumours have been around for a couple of days. The letter from Nardelli last night has only confirmed what we already knew about the debt – it really wasn’t telling us anything new,” Stamoulis says.
“Until there’s some sort of decision from the US Treasury department, anything is possible.
“We need to consider all the options of what might happen, and certainly bankruptcy is one of the avenues that could allow the brand to continue under a new structure.
“It’s not the ideal avenue. The ideal solution is to come to an agreement with Fiat and the Treasury without filing for bankruptcy. But either scenario is not bad news.
“The worst case scenario is if the US government says it sees no future for the company and there may be a chance of liquidation.
“That’s something we don’t want, but don’t expect to happen either.”
The Chrysler rumours follow General Motor’s bid earlier this week to survive by offering the US Government a controlling interest in a bid to shed debt, and hinting that it could be forced to file for bankruptcy if the deal is not accepted.
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