The signs, both real and perceived, are all there. Chrysler, America's 4th largest auto maker is now so close to bankruptcy, there are people saying, "Why not just go ahead and file?" I can see why many feel that way, but it's not so simple.
If Chrysler parent Cerberus were to file, it runs the risk of triggering a whole host of events. Chapter 11 would put even more doubt in the mind of buyers and could significantly hurt sales and revenue flow. It's dealers, already wrestling with how to finance the cars on their lots would find borrowing even tougher as a creditors committee hashes out how to spend debtor in possession money. Suppliers, already demanding cash on delivery of parts, could withhold shipments all together. This could force the company to extend the idling of its plants event longer. You get the point.
So Chrysler and Cerberus limp along as they wait for word from President Bush about bridge financing. Rest assured, the White House knows exactly how much cash Chrysler (and GM and Ford as well) has and when the bank account is tapped to the limit. Even though Chrysler, its dealers, and suppliers all know that there will be some type of financing coming from Washington, it doesn't make the wait any easier.
Don't get me wrong, this is not a case of me throwing a pity party for Chrysler. It is what it is.
What's amazing is watching a company become weaker and weaker. At the Los Angeles Auto Show last month, the Chrysler stand was a dimly lit and uninspiring display. A glaringly obvious example Cerberus is not spending anything more than the bare minimum to keep Chrysler alive. As the biggest auto show of the season approaches in Detroit, people are wondering what Chrysler will show/do.