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America's third-largest car manufacturer, Chrysler,
has declared itself bankrupt after a handful of creditors withstood
pressure from the Obama administration to forgive billions of dollars
in debt, casting a cloud of uncertainty over tens of thousands of jobs
at factories, suppliers and dealers.After round-the-clock
negotiations broke down, the 83-year-old Detroit carmaker put its
future in the hands of the courts, despite an 11th-hour deal with
Italy's Fiat to pool technology in building new vehicles.Both
the White House and Chrysler expressed hope for a "surgical" bankruptcy
lasting 30 to 60 days, clearing the company's liabilities and allowing
it to emerge in healthy shape. But legal experts questioned whether
this will be achievable and factory workers expressed fear for their
jobs.Although unions and Chrysler's leading banks accepted a rescue package
brokered by the US treasury to swap Chrysler's liabilities for shares
in the business, a group of hedge and investment funds refused to
countenance a clause in which Chrysler's $6.9bn (£4.6bn) of debt would
be cancelled through a cash payment of just $2bn.Speaking at the
White House, President Barack Obama made clear his anger towards the
hold-outs: "While many stakeholders made sacrifices and worked
constructively, I have to tell you that some did not. A group of hedge
funds and investment funds decided to hold out for an unjustified
taxpayer bailout."He said it was "unacceptable" for a "small
group of speculators" to endanger Chrysler's future. But he expressed
optimism that Chrysler, which makes brands including Jeep and Dodge,
could be restructured through a bankruptcy filing: "This is not a sign
of weakness, but rather one more step on a clearly charted path towards
revival."Chrysler employs 54,000 people, but tens of thousands
more work for parts companies and in motor dealerships that depend on
the firm for business. About 115,000 retired Chrysler workers depend on
the company for healthcare and benefits.
has declared itself bankrupt after a handful of creditors withstood
pressure from the Obama administration to forgive billions of dollars
in debt, casting a cloud of uncertainty over tens of thousands of jobs
at factories, suppliers and dealers.After round-the-clock
negotiations broke down, the 83-year-old Detroit carmaker put its
future in the hands of the courts, despite an 11th-hour deal with
Italy's Fiat to pool technology in building new vehicles.Both
the White House and Chrysler expressed hope for a "surgical" bankruptcy
lasting 30 to 60 days, clearing the company's liabilities and allowing
it to emerge in healthy shape. But legal experts questioned whether
this will be achievable and factory workers expressed fear for their
jobs.Although unions and Chrysler's leading banks accepted a rescue package
brokered by the US treasury to swap Chrysler's liabilities for shares
in the business, a group of hedge and investment funds refused to
countenance a clause in which Chrysler's $6.9bn (£4.6bn) of debt would
be cancelled through a cash payment of just $2bn.Speaking at the
White House, President Barack Obama made clear his anger towards the
hold-outs: "While many stakeholders made sacrifices and worked
constructively, I have to tell you that some did not. A group of hedge
funds and investment funds decided to hold out for an unjustified
taxpayer bailout."He said it was "unacceptable" for a "small
group of speculators" to endanger Chrysler's future. But he expressed
optimism that Chrysler, which makes brands including Jeep and Dodge,
could be restructured through a bankruptcy filing: "This is not a sign
of weakness, but rather one more step on a clearly charted path towards
revival."Chrysler employs 54,000 people, but tens of thousands
more work for parts companies and in motor dealerships that depend on
the firm for business. About 115,000 retired Chrysler workers depend on
the company for healthcare and benefits.
