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Chrysler’s Proposed Viper Sale Has No Takers

Bankrupt company offered the entire plant for only $10 million.

by on May.27, 2009

No takers for the Viper business means sales of other Chrylser and GM brands are difficult, if not impossible.

No takers for Viper means sales of other Chrysler and GM brands are difficult, if not impossible.

In a bankruptcy court filing Robert Nardelli, CEO of Chrysler LLC, says that the company recently offered for sale its entire Conner Avenue plant in Detroit, the facility that manufactures Dodge Vipers and engines,  and the entire Viper business for only $10 million.

The 392,000 square-foot plant occupies 27 acres where 115 employees assemble the Dodge Viper SRT10 Coupe and Roadster and their V-10 engine. The Viper business earned $16 million in 2008.

Chrysler received “no purchaser interest,” in what amounted to a fire sale of the sports car line.

The lack of any interest whatsoever demonstrates just how depressed the market is for automotive assets of any kind, and it has direct implications for General Motors as it struggles to sell its Saturn, Opel, Saab, and Hummer brands to raise cash and trim its bloated product portfolio.

One of the core arguments of bondholders, who oppose the U.S. Treasury Department imposed restructurings of both companies, is that they would be better off if the companies were broken up. If there are no buyers ,then this speculative assertion is demonstrably false, legally allowing the proposed restructurings to go forward.

A hearing is going on right now in the U.S. Bankruptcy Court in  New York as to whether Fiat’s takeover of Chrysler can proceed by transferring Chrysler assets to the Turin-based small car maker over the objections of bondholders and other creditors.

Subscribe to TheDetroitBureau.comIt is Nardelli’s sworn testimony that the objecting bondholders “simply ignore the fact that the U.S. Treasury Department was the only lender willing to invest in us. As credit markets tightened and automotive sales deteriorated in the fall of 2008, Chrysler suffered a severe liquidity crisis. We were unable to obtain financing from banks or other traditional sources. As a result, and as a last resort, Chrysler approached the United States government for financial support,” Nardelli said.    (more…)

U.S. Bankruptcy Judge Approves Chrysler’s First Day Motions in Federal Court

So far things are progressing smoothly, confounding critics.

by on May.04, 2009

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Tom LaSorda, Vice Chairman and President, left, announced his immediate retirement on the first day of the bankruptcy court proceedings.

Last Friday Judge Arthur Gonzalez in the U.S. Bankruptcy Court in New York City immediately approved a series of court filings from Chrysler LLC known as “first-day motions.” The orders issued by the court allow Chrysler to continue to operate its business during the reorganization proceedings. The quick action was expected, since the court is used to dealing with large, albeit less publicized, bankruptcies.

The Court granted approval for the company’s request to continue payment of wages and health and welfare benefits to employees and contractors, and continue its customer warranty programs.

However, the true test of whether a swift bankruptcy can occur in 30 to 60 days, as the Treasury Department claims, remains at an unknown date in the future. Still to be heard from are Chrysler’s debtors who object to the proposed $2 billion settlement on $6.9 billion in secured Chrysler debt. Even though the four largest banks holding 70% of this debt have agreed to the settlement, it is unknown how Judge Gonzalez will treat the issue. Other impediments to swift reemergence from bankruptcy remain, as hundred of motions from interested parties are expected.  

Subscribe to TheDetroitBureau.comStill, day one went smoothly from Chrysler’s point of view. Only one day before, Chrysler announced a restructuring plan that was agreed to by many of its stakeholders including the Obama Administration, now its largest creditor. The Chrysler agreement in principle to establish a global strategic alliance with Fiat SpA is the cornerstone of a new company. (more…)

High Noon as President Obama Shoots Down Hedge Funds and Speculators

President shoots to kill and explains where he stands on reviving the U.S. auto industry.

by on Apr.30, 2009

As to they implications of this shoot out on recalcitrant GM bondholders, well, I'll bet the President has already reloaded.

As to the implications of this shoot out on recalcitrant GM bondholders, well, I'll bet the President has already reloaded.

At eight minutes past noon today the President of the United States strode into the Grand Foyer of the White House to speak on the Chrysler restructuring.

It may as well have been the OK Corral by the time the President got done shooting down the outlaws that were holding up the restructuring of the wounded, but still breathing Chrysler Corporation.

He began simply enough by saying that his team would continue working with General Motors as its May 30 deadline approached, but quickly moved to the show down at hand.

“And today, after consulting with my Auto Task Force, I can report that the necessary steps have been taken to give one of America’s most storied automakers, Chrysler, a new lease on life,” he said.

“This is a company that has a particular claim on our American identity… Chrysler has not only been an icon of America’s auto industry and a source of pride for generations of American workers; it’s been responsible for helping build our middle class, giving countless Americans the chance to provide for their families, sending their kids to college, saving for a secure retirement.  It’s what hundreds of thousands of autoworkers and suppliers and dealers and their families rely on to pay their bills in communities across our industrial Midwest and across our country.” (more…)