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Old 04-30-2009, 08:19 PM   #1
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Default OFFICALLY OFFICAL : Chrysler Files for bankruptcy proceedings

OHV engines are not for the 21st century.

Source : http://www.thetorquereport.com/2009/...hapter_11.html

President Obama has officially announced that Chrysler will enter into Chapter 11 bankruptcy proceedings and on a more positive note the automaker has finally reached an agreement with Fiat and will enter into a partnership. The Chrysler and Fiat partnership will provide each automaker with access to additional markets. Additionally Fiat powertrains and technology will be produced at Chrysler plants.

"This partnership transforms Chrysler into a vibrant new company with a wealth of strategic advantages," said Bob Nardelli, Chairman and CEO of Chrysler. "It enables us to better serve our customers and dealers with a broader and more competitive line-up of environmentally friendly, fuel-efficent, high-quality vehicles. Benefits to the new company include access to exciting products that complement our current portfolio, technology cooperation and stronger global distribution."
The restructuring plan is expected to last 30-60 days. Also part of the announcement is that Chrysler CEO, Nardelli is going to step down once the restructuring process is complete. Nardelli claims that leaving is his choice and that he was not asked to leave.

Despite substantial progress on many fronts, Chrysler was not able to obtain the necessary concessions from all of its lenders, which would have avoided the need for a bankruptcy proceeding. As a result, under the direction of the U.S. Treasury, Chrysler LLC and 24 of its wholly owned U.S. subsidiaries today filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York.
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Old 05-01-2009, 04:12 AM   #2
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Default Plan includes another $10.5 billion loan to Chrysler

Washington -- Chrysler filed for bankruptcy Thursday in New York in what government officials hope will be a 30- to 60-day stay -- and along with the Canadian government will loan the company $10.5 billion.

The plan, outlined by administration officials and announced by President Barack Obama in a noon appearance at the White House, also includes additional government support to GMAC, the General Motors financing arm that will now provide financing to Chrysler buyers instead of Chrysler Financial.

The administration said workers will continue to be paid and provided with benefits, and the company's pension plan will be preservedThe U.S. Treasury will provide a total of $8.1 billion -- both in debtor-in-possession financing to allow Chrysler to operate under bankruptcy and exit financing to operate out of bankruptcy -- and the Canadian government will provide $2.4 billion, officials said.

The Chapter 11 bankruptcy filing includes Chrysler's 50 largest creditors -- including Johnson Controls, which is owed $50.3 million. Its largest creditor is Toledo-based Ohio Module Manufacturing Co., which is owed $70.3 million, and its second-largest is Troy-based BBDO Detroit Inc., which is owed $58 million.

The Treasury will provide Chrysler with $4.7 billion in financing to help the restructured company emerge from bankruptcy. Chrysler will have a new board of directors and the government will be able to choose up to four directors; the Canadian government has the right to select one board member.

While Chrysler dealers and some of the company's lenders -- holdouts in a final, failed round of negotiations to avert bankruptcy -- could try to derail the process, administration officials said they are confident a restructured company can emerge quickly.

"If a few lenders want to go into court and raise their hand, they're going to be facing more than half of the other lenders as well as more than 70 percent of the capital saying, 'No, no, no, we want to do this deal,' " said an administration source who spoke on condition of anonymity. "And our judgment is that no judge is going to override that kind of support."

The official said Chrysler would seek a so-called "363 sale," named after a section of the federal bankruptcy code. That section allows companies to essentially split off and sell their valuable assets in bankruptcy, unburdened by the debts and other obligations of the old company.

The deal outlined Thursday also sets incentives that encourage Fiat, Chrysler's new alliance partner, to build cars and engines in the United States. Fiat, which initially gets a 35 percent stake in the new company, can earn additional 5 percent stakes if it produces a car at a Chrysler facility that gets up to 40 mpg, builds fuel-efficient engines at U.S. plants, and gives Chrysler access to its extensive global distribution network.

The filing was signed by Chrysler's lead bankruptcy attorney Corinne Ball, of Jones Day. The case was assigned to U.S. Bankruptcy Judge Arthur Gonzales, who has handled major cases like Enron's bankruptcy, along with MCI Worldcom.
A new nine-member board of directors will run Chrysler, including four appointees from the U.S. government, three from Fiat and one from the UAW-run health care trust fund and one from the Canadian government.
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Old 05-01-2009, 04:15 AM   #3
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Default As Detroit Is Remade, the U.A.W. Stands to Gain

DETROIT — In the devastating slump that has forced one of Detroit’s automakers into bankruptcy and another to the edge of it, the United Automobile Workers union stands to become one of the industry’s few winners.

According to restructuring plans proposed this week, the union will have more than half the stock in Chrysler and a third of General Motors, meaning it will have tremendous influence, with the government, in determining the future of the companies.

The United Automobile Workers union said Wednesday that its members ratified a cost-cutting deal with Chrysler by a 4-to-1 margin.

“Our members have responded by accepting an agreement that is painful for our active and retired workers, but which helps preserve U.S. manufacturing jobs and gives Chrysler a chance to survive,” Ron Gettelfinger, the union’s president, said in a statement.

The prospect of a big ownership stake for the U.A.W. in G.M. has angered holders of billions of dollars in bonds, who stand to get only a fraction of the restructured company. As for Chrysler, the banks, hedge funds and others that lent it money have been promised only cash, not stock.

“We believe the offer to be a blatant disregard of fairness for the bondholders who have funded this company and amounts to using taxpayer money to show political favoritism of one creditor over another,” a group of G.M. bondholders said in a statement this week.

The U.A.W. members at both automakers stand to lose some of their pay and benefits, but the cuts are not as deep as those faced by airline and steel workers when their companies went bankrupt. Under proposed deals devised by the Treasury Department, U.A.W. pensions and retiree health care benefits would largely be protected.

The U.A.W. has derived its leverage in part from the support of a Democratic president and Congress. But it also results from a long-term strategy to build support in Washington that stretches back more than 60 years.

“We have to fight both in the economic and political fields, because what you win on the picket lines, they take away in Washington if you don’t fight on that front,” Walter P. Reuther, the union’s best known president, said in 1947.

Mr. Reuther and every succeeding U.A.W. president invested significant amounts of time and money to pursue that goal.
In the last 20 years, the U.A.W. has donated more than $25.4 million to federal candidates, 99 percent of it to Democrats, according to OpenSecrets.org, a site that tracks campaign contributions.

The union ranks No. 16 on the group’s list of top 100 political donors, known as “heavy hitters.” The U.A.W. was well ahead of G.M., which gave $10 million in that period, ranking it 73rd. Chrysler and Ford Motor did not make the list.

Mr. Gettelfinger, the current president, has also been an effective, steel-nerved leader, and has managed to maintain the union’s importance in recent negotiations, even though the U.A.W. has lost nearly 200,000 members since he took office in 2003.

Mr. Gettelfinger’s influence stems in part from the fact that the U.A.W. represents nearly all the auto workers at the Detroit companies. (Workers at a few plants are represented by the I.U.E.) By contrast, airline workers are represented by multiple unions.

“The U.A.W. is so overwhelmingly dominant,” said Duane Woerth, former president of the Air Line Pilots Association. “You’re only talking to one union and that gives them more power.”

Mr. Woerth, whose union was involved in 22 bankruptcy cases involving big and small airlines during his tenure as its president, said the pressure that bondholders and other investors might put on the U.A.W. has been mitigated by Democrats’ support.

For example, the union has yet to complete a deal with G.M., which laid out an offer to its bondholders this week that would pay them about 41 cents on the dollar. In order for the deal to succeed, 90 percent must accept it, which analysts say is unlikely given bondholders’ criticism of the offer.

Only this week did the U.A.W. come to terms at Chrysler, facing a Thursday deadline set by the administration.
The tactics have won admiration from others in the labor movement, even those forced to grant concessions to bankrupt companies.

Robert Roach Jr., a general vice president of the International Association of Machinists and Aerospace Workers, said a successful outcome for the U.A.W. and the auto companies would benefit the economy, and in the process help his 650,000 members at major airlines, aircraft makers and other companies.

“We’re all in this,” Mr. Roach said. “The corporations, the federal government, the taxpayer, the cities and the states. If we are able to save these auto companies, that will be good for everybody.”

But many of the U.A.W. members who voted Wednesday on the Chrysler proposal were struggling to see the benefits of the cuts they were agreeing to.
The deal suspends cost-of-living pay increases, limits overtime pay and reduces paid time off. It also eliminates dental and vision benefits for retirees.

It also provides for Fiat to begin building cars in at least one Chrysler plant.

“Either you vote for it or it’s bankruptcy,” said Bruce Clary, 58, who was an electrician at a Detroit engine plant until being laid off in January. “And it may be bankruptcy anyway.”
At Chrysler’s Jefferson North assembly plant nearby, the oldest auto plant still operating in Detroit, workers said the consequences of rejecting the deal would be far worse than the concessions that it would force.

“This was the best deal we could get,” said John Davis, who has worked at Chrysler for 33 years. “We did our part, and now the banks need to do their part.
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Old 05-01-2009, 04:38 AM   #4
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Default NEWSMAKER-Chrysler judge well-versed in corporate failures

NEWSMAKER-Chrysler judge well-versed in corporate failures

NEW YORK, April 30 (Reuters) - The bankruptcy judge who oversaw the massive cleanup after the Enron and WorldCom meltdowns has a new challenge that may be his toughest yet -- overhauling Chrysler LLC.

Judge Arthur Gonzalez of U.S. Bankruptcy Court in Manhattan was assigned the case on Thursday after the iconic carmaker sought Chapter 11 bankruptcy protection following the breakdown of intense negotiations with lenders.

Chrysler filed the case in one of the premier federal bankruptcy courts, and Gonzalez is one of its most experienced judges.

He simultaneously handled the Enron and WorldCom bankruptcies earlier this decade -- both filed after massive accounting frauds were unearthed at the companies.
"We have a judge here with experience, who did Enron and WorldCom at the same time, so he's not afraid of work and he understands complex issues," said Natasha Labovitz, a partner in the restructuring group at law firm Kirkland & Ellis LLP, who has appeared before the judge.

A former New York City schoolteacher, Gonzalez took the bench in 1995 after monitoring bankruptcies for the government as a U.S. Trustee for New York, Connecticut, and Vermont.

"He is experienced, wise, patient and fair," said Martin Bienenstock, a bankruptcy attorney at law firm Dewey & LeBoeuf LLP, who represented Enron in its bankruptcy. "He works indefatigably and keeps a sense of humor."
Gonzalez will "not at all" be put off by a big case with national attention, Bienenstock said. "He's been there, done that."

If the company and government officials have their way, Chrysler's most profitable units will emerge from bankruptcy in 30 to 60 days as a new company -- a rapid-fire sale process in which the judge will face big decisions early in the case. But other aspects of the case could drag on for years.
The first-day hearing in the case is set for Friday morning.
Gonzalez received a bachelor's degree in accounting from New York's Fordham University in 1969 and a master's degree in education from Brooklyn College in 1974. He was a public school teacher for 13 years.

He got his law degree at Fordham's law school in 1982 and a master of law degree in 1990 from New York University Law School.

Other cases Judge Gonzalez has handled include the Chapter 11 filing by appliance maker Sunbeam Corp in 2001.

He also oversaw the bankruptcies of Iridium LLC, a satellite telephone service, and the collapse of Livent Inc, a Canadian theater-production company that fell apart amid accounting irregularities.
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Old 05-01-2009, 11:32 PM   #5
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Default Chrysler of Canada and Mexico Not In Bankruptcy Filing

TheGMSource - Late last week the CAW approved of major concessions to Chrysler with the hopes they would stay out of bankruptcy. Well, the CAW did their part for Chrysler of Canada - and in return Chrysler of Canada did their part for their Union counterparts.

We're currently pouring through the Chrysler bankruptcy filing and have learned that Chrysler of Canada and Chrysler of Mexico are not included in Chryslers Chapter 11 bankruptcy filing. What does that mean? Well, the CAW's contract passed days ago still stands and was enough to keep Chrysler Canada out of court.

Plants in Canada and Mexico will stay open initially but will be forced to close their doors once their parts supply runs dry. CAW president Ken Lewenza said that he expects Chryslers Canadian plants to close "almost immediately" resulting in 9,400 workers out of work for up to 60 days.

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Old 05-01-2009, 11:46 PM   #6
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