Tort Reform We Can Beleive In

Seems the Chrysler that emerges from bankruptcy does so with a bit of a CYA shield. They are immune from suits filed against cars sold prior to June 10 this year.

Of course there is pending litigation against Chrysler but Chrysler is no longer liable. The plaintiffs may win a suit - but win nothing in the process.

It's as if they aren't really Chrysler anymore, isn't it? ; -)

Could This Be a Reason Chrysler Failed?

'Oh the Tangled Web We Weave . . .'

The NY Times is reporting that GM is seeking an equity stake in Fiat for the turnover of GM's Latin American and European operations.

So Fiat owns Chrysler and GM owns a big chunk of Fiat? Ho boy. ; -)

Another View of those 'Greedy' Hedge Funds

The Business Insider has this article up on the Chrysler Chapter 11 bankruptcy.

If you refuse to honor the debt, or deal with the debt in accordance to prevailing laws, how will you ever be able to borrow money? Who will be willing to lend? That's just what is going on with the auto industry bailouts. Got a union shop? Sorry, have fun attracting bondholders.

However, one of the overlooked pieces of the Chrysler puzzle is how to handle the dealers. There are too many, and there are contractual obligations to the dealers if Chrysler wishes to close them. The bankruptcy should clear some of those obligations.

And I'm afraid a friend of mine who owns a Chrysler dealership, and his employees, will be negatively impacted.

The 'Greedy' Speak

Found on The Business Insider, a communication from the non-TARP debt holders of Chrysler.

The TARP bondholders have some incentive for going along with what the gummint *ahem* suggests. Those debt holders that aren't on the public dole, however, have been frozen out of negotiations regarding debt relief for Chrysler. I especially find these lines informative from their communique:

As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.

[SNIP]

Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars.

Greedy indeed - they end up losing. And the rule of law is being subverted in this process.

Not so Fast!

Well - there may be a fly in the ointment of the Chrysler deal. Those pesky bondholders have turned down the offer from Chrysler to relieve the debt burden. Expect a bankruptcy to unshackle the debt. Then will the Fiat deal still be in place? Stay tuned . . . another episode of this soap opera is sure to happen.

This first came to my attention from Calculated Risk. Seeking Alpha has this story on the potential bankruptcy too. Hat tip to both!

Also read this for an interesting view of what happens if Fiat gets Chrysler.

The Consumation of Chrysler

Well - what a turn of events. While GM is slowly being whittled away into what is hoped to be a sustainable company, Chrysler appears to be off the hook.

They're not really. Word is out that the UAW has approved contract concessions for Chrysler and Fiat has agreed to manage Chrysler (and Fiat still isn't taking on Chrysler debt, AFAIK). What exactly is going on?

Well, it may be best summarized as the invasion of the pod people, Italian style. Basically, Fiat is getting a husk of a company (or the infrastructure of an industrial company) with which it can mold its, Fiat's, reentry into the US market. Fiat will displace the current CEO, Bob Nardelli with a CEO of their own (and who knows what will happen to Jim Press).

What Fiat gets is the ability to build, service and sell Fiats, Alfa Romeos, (and please, please Fiat, bring in Lancias) in the US using the existing structure Chrysler has in place. Expect few if any Chrysler models to survive beyond 2011, possibly some Dodge product will survive, and Jeep should be left pretty much intact (with some of the weaker Jeep product, such as the Compass, going away).

This is a completely different outcome than expected for GM, it basically appears that the US government had enough sense to own only one auto maker. ; -)

Reports of UAW Accord with Chrysler

Now Automotive News is reporting that the UAW has reached an agreement with Chrysler, Fiat and the US government regarding contract concessions. We'll have to see if it's too little. too late.

Anyone Need Machine Tools?

This doesn't look good. According to this article, on Seeking Alpha, there are reports from the German press that Fiat will pick up Opel. The machinations around the bailout and potential Chrysler bankruptcy had to have been a factor.

Chrysler will probably end up in liquidation.

Chrysler

It's looking less and less like Chrysler will make it. Fiat is saying that if both the UAW and CAW (Canadian Auto Workers) don't accept significant pay cuts they will pull out of the proposed merger.

I don't believe this is going to happen.

Bailout Update

GM is being told by the US Treasury Dept to prepare a bankruptcy plan by June 1. Look for a two GM concept where the 'good' GM goes through one track and the 'toxic' GM goes through another. Saturn and Hummer would be the causalities.

The Chrysler - Fiat deal is making some news this morning also. Seems Fiat may be in the running for a larger Chrysler ownership stake (it was to have been significantly less than 50%) and in a position to put in a new board of directors and a management team.