Can anyone offer a 30 sec synopsis of what happened at Chrysler, specifically regarding the taxpayer money given them a couple of months ago? Did the govt. force Chrysler into bankruptcy and thereby relieve them of paying back the billions they got earlier? The govt is becoming the DIP lender , right? So it's first in line as a creditor (or among the first, including employees and whatnot)? this applied to new debt, but not pre-filing debt, right??? Are the first billions of tax $ simply gone now? protected by bankruptcy? What about all the talk about making sure the taxpayer was protected, and the car-czar, and all that??? Was that all just bullshit? Could they not have gone bankrupt without absorbing billions of taxpayer $ first? Likely I am just misunderstanding. I guess a more profound question might be "Does it even matter?" It's all just play money? Technically the fed could just "create" a couple of billion fewer dollars than it had planned to, and everything is offset back to the hypothetical circumstance where no money flowed to Chrysler as a bailout? Maybe I'm just ridiculously stupid, but I'm having a hard time grasping what is fundamentally going on here. (I understand clearly how Chrysler fucked up their business, so no need to explain that; what I'm not clear about is the bailout $'s, where the taxpayers are in line to get them "back," and if it even matters, given the source of the money). lol, trying to imagine lending my neighbor a bunch of money (unsecured), and then forcing him into bankruptcy to make all his other (secured) creditors get money. wtf?
Maybe it's a ploy to bail out Europe? Make money flow to European banks (via the AIG credit default swap hose)? Oh yeah: and GS. maybe I need to get on paranoia meds or something, lol
The short answer is, we hope we will get it back and have attempted to incentivize Fiat to try to pull off a miracle... Assets of Chrysler will be dumped into a new company. Fiat will initially get 20% of the newco equity in exchange for entering into contracts with Chrysler. The Voluntary Employee Benefit Association gets 55% (equity to be administered by the US Treasury). US and Canadian govt get 10%. Fiat has the right to receive another 15% if certain operational targets are met. The board composition of the newco tells you who is in charge, though. Of the 9 members, US gets 4 appointments, Fiat gets 3, Canada gets 1, VEBA gets 1 Fiat will have the right to buy another 16% of the company (at a price in-line with market standards but less than a Fiat multiple at the time) if the outstanding loan to the US Treasury is under $3 billion. We'll see if that ever happens. I think they received $4 bn to date and will have access to a $6.5 bn facility on the other side of BK. Let me know if I got any of this wrong...a lot is TBD
So from reading around it sounds like they're going to do a quick 363 sale and screw all the bond-holders (even more than thye've been screwed by Chrysler). I guess they better have had bought insurance! A government forced fire-sale to fiat with an end run around bondholders rights does really rub me the wrong way though. Another step towards USSA, I guess.
And they will be out of bankruptcy in 30 days.... hahaha complete joke, 3rd biggest car company in the US is going to turn everything around in less than 3 weeks, come on, who is actually going to believe this pathetic nonsense. This is the 5th biggest bankruptcy in US history and they think they can turn things around after billions and billions of dollars worth of losses, get real, they will be lucky to be still around in another 6 months.