An Obama administration official said that Chrysler will file for a Chapter 11 bankruptcy this afternoon, according to the Wall Street Journal.
First thought: what a strange world we live in when bankruptcies are announced through administration leaks.
President Barack Obama is scheduled deliver remarks on the auto industry at noon, when he will likely formally announce the bankruptcy.
Here’s the Journal’s report:
Earlier Thursday an administration official said the restructuring of Chrysler LLC will go forward even though a handful of hedge funds have refused to accept the Treasury Department’s offer to cut the auto maker’s debt.
“Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments” by Chrysler, its planned alliance partner Fiat SpA and other stakeholders in the company, the official said, “nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward.”
This is pretty strong talk from an administration whose efforts to keep Chrysler out of bankruptcy have failed. Lenders who resisted the Treasury’s plan may challenge the attempt to overhaul the company in a matter of weeks. Chrylser’s dealers will likely challenge any attempt to shut down dealerships in a quickie bankruptcy. How long before we start too hear that these challenges are somehow unpatriotic? “If you don’t restructure Chrylser, the evil-doers win.”