Chrysler Bankruptcy

We are only a few days into the Chrysler BK and things already looked muddled. The Detroit Free Press has an interesting article on the proceedings and the immediate road blocks thrown up by some creditors.

The U.S. Treasury wants to loan Chrysler $3.34 billion and the Canadian government $1.16 billion of the in-court financing.

He also said there was a "low probability" that Chrysler would be able to repay that loan. That means the U.S. Treasury could end up losing nearly $8 billion in loans issued to Chrysler -- including the $4 billion loaned in January.

So, the taxpayers are already eating about $8 billion right out of the gate.

"The survival of Chrysler's business is at stake in these proceedings, as is the fate of hundreds of suppliers and thousands of Chrysler dealers around the country," Chrysler's lead bankruptcy attorney, Corinne Ball, said in a court filing Sunday. "Absent immediate action, (Chrysler) will lose the only opportunity available to them to preserve their business as a going concern and to avoid the economic devastation that will occur if Chrysler's business, and Chrysler's suppliers and dealers, are forced to shut down."

As bad as the initial $8 billion loss is, there is a small possibility that Chrysler could end up in liquidation. That would create untold chaos. Even if they emerge in partnership with Fiat, it looks their prospects are weak for surviving more than a couple of years. Ugly.