Chrysler creditors need more coercing
Talks between Chrysler, its creditors and the U.S. Treasury hit a snag when the hedge funds that own part of the automaker's debt balked. But a Chrysler bankruptcy doesn't mean the deal with Fiat is off. Steve Henn reports.
A Chrysler worker exits the Chrysler Warren Truck Plant in Warren, Mich. (Bill Pugliano/Getty Images)
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Steve Chiotakis: It looks like Chrysler has a future after all. But part of that future may be in bankruptcy court. Late last night, talks broke down between its creditors and the U.S. Treasury Department. President Obama will address the situation in a couple of hours. More now from Marketplace's Steve Henn.
Steve Henn: A deal that might have saved Chrysler from bankruptcy was scuttled last night by a small group of hedge funds.
Chrysler owes its creditors almost $7 billion. It borrowed most of that money from banks, and earlier this week those banks agreed to take $2 billion in cash from the federal government and just walk away. But some hedge funds which also own Chrysler debt balked.
Erich Merkle's an independent auto industry analyst. He says a Chrysler bankruptcy doesn't mean the deal with Fiat is off.
Erich Merkle: I think they will announce both at the same time.
Obama may make those announcements himself.
But Rebecca Lindland, director of automotive research for Global Insight, says even in a controlled bankruptcy, there are big risks:
Rebecca Lindland: It's like surgery. You could run into some kind of unforseen complication and the whole thing explodes and the patient dies.
That patient employees 54,000 people in the U.S.
In Washington, I'm Steve Henn for Marketplace.
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