Chrysler Advisory Firm Says Business Worsened

Bankrupt automaker Chrysler advisory firm said in court documents that, based on updated financial information, the financial recovery for lenders and the U.S. government would be worse under a liquidation scenario than it previously thought.

In the documents, Capstone Advisory Group said the company's first lien, or most senior lenders, would have recovered 18 percent of their investment at the most and zero at the worst in two different liquidation scenarios based on its cash balance as of April 30.

In a previous analysis released after Chrysler's April 30 bankruptcy filing and based on its April 1 cash balance of $1.34 billion, the lenders would have recovered from 9 percent to 38 percent of their investment.

The report prepared by Capstone's Robert Manzo said the car company had $407 million of free cash to use for the liquidation as of April 30.

The U.S. Treasury would recover 3 to 5 percent of its investment, it said in the latest report, compared with 3 percent to 6 percent in its previous analysis.

Chrysler is awaiting court approval for a transaction in which it will sell itself to Italy's Fiat, a union affiliated group, and the U.S. and Canadian governments.

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