LLC widely is expected to file bankruptcy following the collapse of last-ditch negotiations with holdout creditors and the U.S. Treasury Dept.
was on track to meet a May 1 restructuring deadline imposed by the Obama Admin. A successful restructuring was tied to emergency government financing expected to help the auto maker avoid bankruptcy.
But talks to restructure the auto maker’s debt – a precondition of the financing agreement – remain incomplete. Bankruptcy now is unavoidable, according to a Bloomberg News report that quotes an anonymous Obama Admin. official.
President Obama was to meet this morning with members of his auto industry task force before addressing the nation on Chrysler’s fate.
Still,Auto Group is expected to make an announcement today about its aspirations for Chrysler. The auto makers have been engaged in partnership talks for several months.
The White House has said its promised support for Chrysler – up to $6 billion in taxpayer-funded loans – was contingent on the successful conclusion of an alliance.
The impending bankruptcy overshadows progress made Wednesday on the labor front. The United Auto Workers union ratified concessions designed to provide labor-cost relief – another key precondition of Obama’s aid plan.
Production workers voted 82% in favor of the deal that eliminates planned bonuses, lump-sum payouts and some benefits. Skilled-trades workers, clerical personnel and engineers represented by the UAW approved the deal by 80%, 90% and 94%, respectively.
“This has been a challenging time filled with anxiety and uncertainty for our membership,” says UAW President Ron Gettelfinger. “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.”
In a statement tinged with irony, UAW Vice President General Holiefield adds: “If other stakeholders will join us in making difficult sacrifices, Chrysler will have a chance to rebuild and participate in the eventual recovery of the U.S. vehicle market.”
Notably, the agreement includes a commitment fromthe Italian auto maker will build a new small car in one of Chrysler’s U.S. plants.
Says Chrysler Vice Chairman and President Tom LaSorda: “We are thankful to the Chrysler UAW members for their support in ratifying this contract, especially during these challenging times. The entire Chrysler leadership team believes in and appreciates the men and women that make up our great workforce worldwide.”
Chrysler sales fell 32% last month, compared with March 2008. But the overall U.S. light-vehicle market was down 34%.
April sales, due out tomorrow, are expected to track even with last month, according to a Ward’s forecast.