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Chrysler Bankruptcy ?
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<blockquote data-quote="Bonsman" data-source="post: 655656" data-attributes="member: 8504"><p>As an owner of a dodge or chrysler vehicle, I would not be too concerned about a bankruptcy. They will file a chapter 11 reorganization rather that a chapter 7 liqidation. However, if you are a dealer, stockholder, or have a pension with Chrysler then I would have a lot of concern. Also, all the entities that are owed money by Chrylser should be concerned.</p><p></p><p>A chapter 11 will allow them to reject a lot of their executory contracts and get better deals. The union contracts are very complicated in bankruptcy. But the unions will get a haircut. </p><p></p><p>You can use the airlines as an example. Typically, in a chapter 11 they will exchange stock for debt. So all the stockholders will get wiped out and the creditors (bondholders, gov't, and unions) will become the new stockholders in exchage for the money they are owed. That will reduce debt. The wildcard is always the pre-petition lenders, Chrylser's ability to use cash collateral, and obtain post-petition financing. Usually, the secured creditors will provide the post-petition financing because they have too much invested in the company. Also, early in the bankruptcy, motions will be filed to allow Chrysler to honor warranties on the vehicles they have sold.</p><p></p><p>Chrysler could sell off some brands--like jeep--to raise money. It will likely be a pre-packaged plan wherein most of the major issues will be resolved before the bankruptcy is filed. The bottom line is that the ordinary consumer will not have much to worry about. Most of the brands will survive; they will just have new ownership.</p></blockquote><p></p>
[QUOTE="Bonsman, post: 655656, member: 8504"] As an owner of a dodge or chrysler vehicle, I would not be too concerned about a bankruptcy. They will file a chapter 11 reorganization rather that a chapter 7 liqidation. However, if you are a dealer, stockholder, or have a pension with Chrysler then I would have a lot of concern. Also, all the entities that are owed money by Chrylser should be concerned. A chapter 11 will allow them to reject a lot of their executory contracts and get better deals. The union contracts are very complicated in bankruptcy. But the unions will get a haircut. You can use the airlines as an example. Typically, in a chapter 11 they will exchange stock for debt. So all the stockholders will get wiped out and the creditors (bondholders, gov't, and unions) will become the new stockholders in exchage for the money they are owed. That will reduce debt. The wildcard is always the pre-petition lenders, Chrylser's ability to use cash collateral, and obtain post-petition financing. Usually, the secured creditors will provide the post-petition financing because they have too much invested in the company. Also, early in the bankruptcy, motions will be filed to allow Chrysler to honor warranties on the vehicles they have sold. Chrysler could sell off some brands--like jeep--to raise money. It will likely be a pre-packaged plan wherein most of the major issues will be resolved before the bankruptcy is filed. The bottom line is that the ordinary consumer will not have much to worry about. Most of the brands will survive; they will just have new ownership. [/QUOTE]
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