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* April 21, 2009, 11:34 PM ET

Three Scenarios Seen for Chrysler:confused:

The Obama administration’s auto task force has stepped up efforts to reach a resolution on the fate of Chrysler, with representatives of the auto maker, its potential alliance partner Fiat, the UAW and Chrysler’s secured lenders in Washington for talks.

The parties are working to come to agreements on labor cost cuts, debt reductions and a Chrysler-Fiat alliance, as well as another tranche of government loans to keep the auto maker in business.

People who have been in touch with the task force see three possible scenarios:

1. The parties find a way to reach the necessary agreements, Chrysler gets restructured out of court and the Fiat deal goes through.

2. Banks and other secured lenders balk at cutting the company’s debt, the government pushes Chrysler into bankruptcy and Fiat forms a partnership with the salvageable pieces of Chrysler (most likely Jeep, the minivan business, the Dodge Ram pick up truck line and its rear-wheel drive Chrysler 300 and Dodge Charger sedans).

3. No agreements are reached and Chrysler goes out of business and its assets are liquidated.

One person who has met with the task force several times said the administration is very concerned about scenario #3 and the impact it could have on the U.S. economy. “They’re nervous that if they let Chrysler go bankrupt, it will be a shock and will kick off a downward spiral [in the economy] again,” this person said.

Under a fourth scenario, Chrysler would go out of business and the best assets — Jeep, the minivans, the rear-wheel drive models but not the Ram trucks — would “be put to GM.” But this is seen as even less likely than a liquidation, this person said.

LINK:Chrysler Scenarios - Auto Industry Tracker - WSJ
 

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Super Moderator
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‘do the right thing’

Gov. Granholm: lenders need to ‘do the right thing’

Posted Wednesday, Apr 22, 2009, 9:08 am in Employee News

Michigan Gov. Jennifer M. Granholm last night issued the following statement on reports that lenders have rejected a request by the Obama administration that they take a significant reduction in the debt owed to them by Chrysler LLC:

“Our economy is in turmoil as a result of Wall Street’s irresponsible actions, and now some of the very institutions that received $90 billion in federal support are turning their backs on a company that employs tens of thousands of American workers. These lenders—particularly J.P. Morgan Chase—hold the future of Chrysler in their hands, and I ask them to do the right thing while there is still time. They need to collapse their debt as the Obama administration has asked to ensure the viability of the company, which is critical for the families, employees, retirees, dealers, suppliers and others who rely on it. To do otherwise is not only disappointing, it is unconscionable at best.”
 
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