The Financial Bailout Fiasco

After struggle, Chrysler succumbs to bankruptcy

DETROIT (AP) — The first sound of the gavel in Chrysler's bankruptcy case might as well be the bang of a starter's pistol.Chrysler Warrenty Average cost

The nation's third-largest automaker filed for Chapter 11 bankruptcy protection Thursday with an ambitious plan to emerge in as little as 30 days as a leaner, more nimble company. And Chrysler's first hearing in a New York courtroom Friday morning may offer the first clue as to whether a quick, "surgical" bankruptcy is actually possible.

After months on government life support, Chrysler is pinning its future on a top-to-bottom reorganization and plans to build cleaner cars through an alliance with Italian automaker Fiat. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.
Chrysler US Government Bailout Chart
On Friday morning, bankruptcy court Judge Arthur Gonzalez is scheduled to hear the case's first motions, which typically will allow the company to continue paying workers and basic utility costs as it restructures.

Eventually, Gonzalez will have to sort out the key issue that made bankruptcy necessary: the creditors that hold $6.9 billion of the Chrysler's debt.

Chrysler's Round Trip Bankruptcy

from: http://www.pbs.org/nbr/site/onair/transcripts/nbr_transcripts_090430/

SUZANNE PRATT: Today's trip to bankruptcy court is not Chrysler's first time in financial hot water. Jeff Yastine looks at the auto maker's past and what it says about Chrysler's future.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: In 1979, the nation was in a gasoline crisis. Jimmy Carter was in the White House and a potential bankruptcy of Chrysler was in the financial pages. Not everyone believed a bailout of the auto maker was a good idea, including then Senate Banking Committee Chairman William Proxmire.

SEN. WILLIAM PROXMIRE, SENATE BANKING CHAIRMAN: This would mean of course that if we did bail them out, sure, we'd save jobs. We'd save the misery of people failing, but we'd also keep incompetent management operating. We'd also have the people producing things that weren't needed and of course the burden on the taxpayer would be tremendous.

YASTINE: Congress approved $1.5 billion in loan guarantees anyway and with new Chairman and CEO Lee Iacocca at the helm...

The White House described the move as a "surgical short bankruptcy" which should last between 30 and 60 days. Others say even 60 days is too short if ever. The US taxpayer now may be exposed to nearly $20 billion plus Chrysler bailout money from Canada of $3.77 billion.

More at sources: http://www.google.com/hostednews/ap/article/ALeqM5hktj5QRHLZw1POuhJFjybM...
http://www.warrantyweek.com
http://www.pbs.org/nbr/site/onair/transcripts/nbr_transcripts_090430/