US Auto Giant Chrysler Files for Bankruptcy

Chrysler LLC's headquarters in Auburn Hills, Michigan, USA, 19 November 2008. The long ailing US carmaker Chrysler LLC was declaring bankruptcy 30 April 2009, MSNBC reported. Photo by EPA/BGNES

One of the three pillars of the American auto industry, Chrysler, is filing for bankruptcy Thursday, the Washington Post reports, citing an Obama administration official.

The move was triggered by the Wednesday night failure of last-minute negotiations between the government and the automaker's creditors night.

US officials had offered Chrysler's secured lenders USD 2,25 B in cash if they would agree to forgive the USD 6,9 B in secured debt owed by the car maker. A small group of hedge funds refused the deal, forcing an imminent bankruptcy.

President Obama is scheduled to address the issue at 7 pm Bulgarian time Thursday at the White House.

Under the administration's detailed "bankruptcy" plan, the current CEO, Robert L. Nardelli, would be replaced, and ownership of Chrysler would be dramatically reorganized, the leadership of Italian automaker Fiat would take over company management and the US and Canadian governments would contribute more than USD 10 billion in additional funding.

The automaker's current majority owner, the private-equity firm Cerberus Capital Management, would have its holdings wiped out.

The government plan also calls for ensuring that Chrysler maintains substantial US manufacturing operations.

 

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