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| Lenders object to Chrysler plan | Lenders object to Chrysler plan |
| (9 minutes later) | |
| A group representing 20 Chrysler lenders, holding $1bn (£674m) in debt, are set to object to the firm's move into Chapter 11 bankruptcy protection. | A group representing 20 Chrysler lenders, holding $1bn (£674m) in debt, are set to object to the firm's move into Chapter 11 bankruptcy protection. |
| Chrysler said on Thursday it would enter protection immediately and form an alliance with Italian carmaker Fiat. | Chrysler said on Thursday it would enter protection immediately and form an alliance with Italian carmaker Fiat. |
| The 20 lenders will challenge the terms of a government-brokered deal to cut Chrysler's $6.9bn (£4.67bn) in debt at court hearings due to begin on Friday. | The 20 lenders will challenge the terms of a government-brokered deal to cut Chrysler's $6.9bn (£4.67bn) in debt at court hearings due to begin on Friday. |
| Observers have suggested the process could delay Chrysler's recovery plan. | Observers have suggested the process could delay Chrysler's recovery plan. |
| Quick? | Quick? |
| Chapter 11 bankruptcy protects firms from their creditors, allowing them to rearrange their finances while still trading. | Chapter 11 bankruptcy protects firms from their creditors, allowing them to rearrange their finances while still trading. |
| The first bankruptcy hearing gets under way in front of Judge Arthur Gonzalez in New York on Friday, and is expected to deal with basic issues such as paying workers and utility costs. | The first bankruptcy hearing gets under way in front of Judge Arthur Gonzalez in New York on Friday, and is expected to deal with basic issues such as paying workers and utility costs. |
| Over the coming weeks, those with an interest in Chrysler's future - including the company, creditors, suppliers, dealers and workers - will seek to have their legal say on the reorganisation plan. | Over the coming weeks, those with an interest in Chrysler's future - including the company, creditors, suppliers, dealers and workers - will seek to have their legal say on the reorganisation plan. |
| The US government has called for a quick, "surgical" bankruptcy, with the process completed within two months. | The US government has called for a quick, "surgical" bankruptcy, with the process completed within two months. |
| BANKRUPTCY PROTECTION US bankruptcy protection is called Chapter 11It gives US businesses time to rearrange their finances while continuing to trade, protected from their creditors.After filing, it is up to the judge to decide who gets paid and how much, balancing the interests of all partiesThe judge holds hearings where all the parties give their viewsHis ruling can be appealed Can Fiat save Chrysler? Q&A: What next for Chrysler? | |
| But some experts have said that may be difficult with so many different groups involved, including the group of 20 lenders. | But some experts have said that may be difficult with so many different groups involved, including the group of 20 lenders. |
| "I can't tell you how many times people say 'quick'," said David Bitterman, managing director of Huron Consulting Group. | "I can't tell you how many times people say 'quick'," said David Bitterman, managing director of Huron Consulting Group. |
| "It's never quick. [Car parts-maker] Delphi promised a quick one and they're still in." | "It's never quick. [Car parts-maker] Delphi promised a quick one and they're still in." |
| Delphi, which was spun off from General Motors, filed for bankruptcy in late 2005. | Delphi, which was spun off from General Motors, filed for bankruptcy in late 2005. |
| A White House official said the majority of Chrysler's stakeholders were behind the deal. | A White House official said the majority of Chrysler's stakeholders were behind the deal. |
| "Our judgment is that no judge is going to override that kind of support." | "Our judgment is that no judge is going to override that kind of support." |
| US officials are expected to ask the judge to force the dissenting creditors to accept the same offer that institutions holding 70% of Chrysler's debt have approved. | US officials are expected to ask the judge to force the dissenting creditors to accept the same offer that institutions holding 70% of Chrysler's debt have approved. |
| Investor interests | Investor interests |
| Meanwhile, Chrysler has said it will close all of its plants from Monday until the carmaker comes out of bankruptcy. | Meanwhile, Chrysler has said it will close all of its plants from Monday until the carmaker comes out of bankruptcy. |
| In pictures: Chrysler's journey | In pictures: Chrysler's journey |
| However, three factories sent workers home on Thursday after suppliers stopped sending parts because of fears that they would not be paid. | However, three factories sent workers home on Thursday after suppliers stopped sending parts because of fears that they would not be paid. |
| Chrysler Canada, which is not part of the bankruptcy filing, is expected to keep its plants operating until it runs out of parts, according to Canadian Auto Workers union president Ken Lewenza. | Chrysler Canada, which is not part of the bankruptcy filing, is expected to keep its plants operating until it runs out of parts, according to Canadian Auto Workers union president Ken Lewenza. |
| The carmaker hopes to sell its core assets, including the Chrysler, Jeep and Dodge brands, into a new company that would be owned by the US government, Fiat, and the company's workers. | The carmaker hopes to sell its core assets, including the Chrysler, Jeep and Dodge brands, into a new company that would be owned by the US government, Fiat, and the company's workers. |
| The group of 20 lenders have said in a joint statement they were being criticised for trying to protect the interests of their investors, including unions, teachers' credit unions, college endowments, and pension and retirement plans. | The group of 20 lenders have said in a joint statement they were being criticised for trying to protect the interests of their investors, including unions, teachers' credit unions, college endowments, and pension and retirement plans. |
| "They [Chrysler] say they are going to allocate out and distribute the proceeds of the sale in a way that they couldn't do if they were going to do it under a Chapter 11 plan," said Tom Lauria, a bankruptcy attorney at White & Case, representing a group of secured lenders. | "They [Chrysler] say they are going to allocate out and distribute the proceeds of the sale in a way that they couldn't do if they were going to do it under a Chapter 11 plan," said Tom Lauria, a bankruptcy attorney at White & Case, representing a group of secured lenders. |
| Health plan | Health plan |
| Mr Lauria has said that Chrysler's proposed plan "inverts" the usual priority scheme, whereby senior secured creditors are paid in full first, followed by junior lenders, administrative claims, unsecured lenders and equity holders. | Mr Lauria has said that Chrysler's proposed plan "inverts" the usual priority scheme, whereby senior secured creditors are paid in full first, followed by junior lenders, administrative claims, unsecured lenders and equity holders. |
| Creditors object to the way the restructuring benefits the United Auto Workers union, which is an unsecured creditor, for the $10.6bn Chrysler owes to its retiree healthcare fund. | Creditors object to the way the restructuring benefits the United Auto Workers union, which is an unsecured creditor, for the $10.6bn Chrysler owes to its retiree healthcare fund. |
| "What's happening is the senior secured creditors are going to get 29 cents on the dollar and the unsecured creditors are going to get $10bn," said Mr Lauria. | "What's happening is the senior secured creditors are going to get 29 cents on the dollar and the unsecured creditors are going to get $10bn," said Mr Lauria. |
| The lenders said in a statement on Thursday that they had been "systematically precluded" from negotiations with the government. | The lenders said in a statement on Thursday that they had been "systematically precluded" from negotiations with the government. |
| They said they had not been allocated funds from the Tarp programme, but that Chrysler's four main banks - JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup - had received about $90bn in government bail-out cash. | They said they had not been allocated funds from the Tarp programme, but that Chrysler's four main banks - JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup - had received about $90bn in government bail-out cash. |
| The four banks, holding 70% of Chrysler's debt, have agreed to a deal that would give them $2bn. | The four banks, holding 70% of Chrysler's debt, have agreed to a deal that would give them $2bn. |
| 'Painful transition' | 'Painful transition' |
| University of Michigan professor John Pottow, a specialist in bankruptcy, said the US government's level of involvement was much greater than would normally be found in a corporate bankruptcy. | University of Michigan professor John Pottow, a specialist in bankruptcy, said the US government's level of involvement was much greater than would normally be found in a corporate bankruptcy. |
| "If you have the president of the United States who wants something to happen, I think anything's possible in bankruptcy protection," he said. | "If you have the president of the United States who wants something to happen, I think anything's possible in bankruptcy protection," he said. |
| Meanwhile, Chrysler's suppliers face an uncertain time. | Meanwhile, Chrysler's suppliers face an uncertain time. |
| Peter DeLorenzo, of internet car magazine Auto Extremist, told the BBC that "suppliers' backs are already up against the wall". | Peter DeLorenzo, of internet car magazine Auto Extremist, told the BBC that "suppliers' backs are already up against the wall". |
| "It is going to be a very painful transition," he said. | "It is going to be a very painful transition," he said. |
| Mr DeLorenzo also said that plans to have the company out of bankruptcy within 60 days were "terribly optimistic". | Mr DeLorenzo also said that plans to have the company out of bankruptcy within 60 days were "terribly optimistic". |
| On Friday, Toshihiro Nikai, Japan's trade minister, said his government would take "solid steps" to mitigate the impact on Japanese car parts suppliers from Chrysler's bankruptcy. | On Friday, Toshihiro Nikai, Japan's trade minister, said his government would take "solid steps" to mitigate the impact on Japanese car parts suppliers from Chrysler's bankruptcy. |
| Japan's Denso Corporation sold 43bn yen ($441m) of parts to Chrysler in the last financial year, is owed $18.7m by Chrysler while auto parts firm Yazaki Corporation has $18.3m in unsecured claims. | Japan's Denso Corporation sold 43bn yen ($441m) of parts to Chrysler in the last financial year, is owed $18.7m by Chrysler while auto parts firm Yazaki Corporation has $18.3m in unsecured claims. |