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Chrysler Denies Reports of Impending Bankruptcy

The auto maker has been racing to reach a government-imposed April 30 deadline to secure a tie-up with Fiat and significantly reduce the debt it owes to lenders.

In an apparent attempt to soothe anxious dealers, Chrysler LLC Vice Chairman Jim Press reportedly spoke to key dealers via conference call today to assure them “nothing has changed” and that Chrysler plans to restructure outside of bankruptcy court and successfully merge with Italy’s Fiat Auto Group.

Press does concede that should all concessions not be obtained, bankruptcy would be an option, according to the online version of the The Wall Street Journal.

Chrysler declines further comments on reports the U.S. Treasury is preparing to push the auto maker into Chapter 11 bankruptcy, a move that would clear the way for a merger with Fiat.

The New York Times yesterday reported Treasury officials were preparing the auto maker for a bankruptcy filing as early as next week.

Citing “people with direct knowledge of the action,” the paper says the Treasury has struck a deal with the United Auto Workers union promising it would safeguard pensions and benefits.

In response, Chrysler has issued a statement saying the Obama Admin. “recognized the viability of Chrysler and its products, in combination with a Fiat alliance.

“Chrysler has consistently said that its viability will be enhanced through an alliance with Fiat, as it represents a change in the company’s business model that expands its global competitiveness,” the statement says.

“As we move forward in this process, we believe it’s important to keep all options open. Chrysler will continue to work through the end of the month, based on the direction given by the Presidential Task Force, to secure the support of the necessary stakeholders and reach a successful conclusion that the (Obama) Admin. and the U.S. Treasury deems appropriate.”

Chrysler has been racing to reach a government-imposed April 30 deadline to secure a tie-up with Fiat and significantly reduce its debt.

Although Chrysler officially remains mum about ongoing discussions with Treasury and lenders, The Wall Street Journal today reports Treasury officials are working with debt holders to cut the auto maker’s debt from $6.9 billion to $3.75 billion.

Citing sources familiar with the talks, the newspaper says under a plan concocted by Treasury, the government would allow Chrysler to enter bankruptcy, after which Fiat would be free to pick which of the auto maker’s operations it wants.

Chrysler spokeswoman Shawn Morgan tells Ward’s the reports are “speculation,” and declines further comment.

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TAGS: Dealers Retail
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