As the bankruptcy hearingsabout creating a new Chrysler pick up steam in New York, it's becoming crystal clear how quickly the Federal Government wants to re-structure the ailing auto maker.
Chrysler would like to have a lead bidder established by May 20th and the sale approved by May 21st. That's just over two weeks away. Don't worry, the unsecured lenders who are already furious with the governments debt exchange offer will be fighting this "fast track bankruptcy" the whole way.
Chrysler and the Federal Government both want the sale of assets creating a new Chrysler to happen as quickly as possible. Fiat can walk away from the deal if it's not finalized by June 15th. This means a showdown over Chrysler assets will come to a head very quickly. Chrysler would like bids on assets within ten days. Will Chryslers unsecured creditors be making bids? I don't think so.
The big complaint by the unsecured creditors at Chrysler is they are not getting the type of payment they deserve for lending billions to the auto maker. They believe bankruptcy law makes it clear they have a right to get more money. Now, they are in a stare down with the Federal government. The creditors biggest weapon is the threat of slowing down the bankruptcy process. If they can convince Judge Gonzalez to slow down the time line for creating a new Chrysler, then they have a shot at forcing Washington to pony up with more money. For their part, Chrysler and the Federal Government will argue, "If the creditors think these auto assets are worth more, make a bid."
The next two weeks will tell us if we see the new Chrysler and Fiat take off by the end of June.
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