Source:
Detroit NewsWednesday, April 29, 2009
Chrysler pushed to brink
Despite deal with major banks, it may be forced into bankruptcy this week
David Shepardson / The Detroit News
Washington -- Chrysler LLC could be forced to file for bankruptcy as early as this week, despite agreement by the automaker's major creditors to forgive much of its debt. The White House praised the agreement, but it pointedly wouldn't rule out bankruptcy. "There's still some ways to go in these negotiations. So I wouldn't rule anything in or out," White House spokesman Robert Gibbs said Tuesday.
Four principal banks that hold about 70 percent of the automaker's secured debt, including J.P. Morgan, Citibank, Goldman Sachs and Morgan Stanley, have agreed in principle to accept $2 billion in cash for $6.9 billion in secured debt, according to people familiar with the matter.
But they said some other banks -- there are 46 in all -- are resisting the deal.
"Without having all 46 banks, it would still be necessary for Chrysler to go through what we call our 'surgical bankruptcy' -- 30-day type of process -- in order to in effect drag along any banks that choose not to participate," said a person familiar with the matter.
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