Last-ditch negotiations aimed at reducing the company’s debt prove fruitless
Chrysler will file for bankruptcy protection in a New York courtroom today for what White House officials expect to be a 30 to 60 stay after last-minute negotiations with creditors failed to yield an alternative solution. The filing is part of the automaker’s ambitious restructuring efforts, for which Chrysler will receive yet more government money. The U.S. Treasury has pledged US$3.3 billion to keep the company afloat during its bankruptcy, while the Canadian government has agreed to kick in another $800 million in exchange for two per cent of the company’s equity. The Treasury has also agreed to provide Chrysler with US$4.5 billion to exit bankruptcy. The key sticking point in the negotiations that led to the bankruptcy filing was the reluctance of three of Chrysler’s 46 creditors to accept over US$2 billion in cash in exchange for wiping out US$6.9 billion of the automaker’s debt.