With the deadline for the Fiat-Chrysler merger just one week away, a move Fiat still insists will happen, the US Treasury department is apparently preparing for a Chapter 11 bankruptcy filing for Chrysler.
It has been reported that the bankruptcy filing for Chrysler could come as early as next week. The filing would allow for Fiat to complete its alliance with Chrysler whilst it was under the bankruptcy protection.
Meanwhile, Chrysler’s lenders are negotiating with the government to reduce the manufacturer’s debt. Yesterday, the Treasury offered lenders about 22 cents in the dollar per share (for a total of $1.5 billion of the almost $7 billion in outstanding debt), as well as 5 per cent of a restructured Chrysler. Lenders are expected to make a counter offer tomorrow.
Fiat CEO Sergio Marchionne doesn’t seem detrred, saying he remains confident his company would seal the proposed deal with Chrysler by next week.
Mr Marchionne admitted, for the first time, that Fiat would consider injecting some cash into Chrysler, a move that drew skepticism from analysts concerned about Fiat’s own dwindling reserves.
CarAdvice will endeavour to keep you posted on any developments.