By now you have heard: The White House is forcing Chrysler into Chapter 11. Hold onto your chairs, kids, it’s gonna be a wild ride.
Workers will continue to be paid and provided with benefits, Obama administration officials said. The White House is going to loan the embattled maker of the Town & Country another $7.5 billion.
The UAW is urging bankruptcy court to retain the union contracts, The Detroit news reports. The UAW actually stands to gain from all of this forced reorganization, oddly enough. In the restructuring plans proposed this week, the UAW has been given a one-half stake in Chrysler and a one-third stake in General Motors, The New York Times reports.
This agreement is not sitting well with bond holders.
The cuts to auto workers pay and pensions will not be as deep as those to steel companies and airlines that underwent Chapter 11. The Times says that’s because auto workers have the support of the Democratic Congress and President Obama.
The Detroit News writes in an editorial that the government is using Chrysler as a bankruptcy Guinea pig, after it met requirements to forge a deal with Fiat and secured concessions from auto workers and bondholders.
The big question, according to The New’s Daniel Howes, is will people buy Chryslers after this?