Bad News for Chrysler
Two important facts:
1) The lawyers for Chrysler's bankruptcy are asking to be paid first, instead of along with the secured debt-holders as is usually the issue. This is because they think that with the UAW, US govt., Canadian govt. and Fiat gobbling up all the good stuff, what is going to be left is.. well.. nothing. Which means nothing for debt-holders, secured or otherwise. Aren't secured debt-holders meant to get assets first? Well, yeah. Except when the govt. does feel that way... Welcome to the age of arbitrary decisions based on a policy of "Obama Knows Best"
2) Because of the plant shutdown (Chrysler is not building cars during bankruptcy) it will be very difficult for the company to start making cars again. Apart from the difficult logistics of stopping and starting the giant machine (and storing stuff like paint in the meantime), there is the issue of suppliers: suppliers are being forced to stop work as well, as many are already owed by Chrysler. The risk is that some/many go under or stop working on what Chrysler needs. Just like the mighty Boeing Dreamliner which was delayed due to a shortage of bolts, the failure of a 2nd tier or 3rd tier supplier to Chrysler could further delay getting everything running again.
1) The lawyers for Chrysler's bankruptcy are asking to be paid first, instead of along with the secured debt-holders as is usually the issue. This is because they think that with the UAW, US govt., Canadian govt. and Fiat gobbling up all the good stuff, what is going to be left is.. well.. nothing. Which means nothing for debt-holders, secured or otherwise. Aren't secured debt-holders meant to get assets first? Well, yeah. Except when the govt. does feel that way... Welcome to the age of arbitrary decisions based on a policy of "Obama Knows Best"
2) Because of the plant shutdown (Chrysler is not building cars during bankruptcy) it will be very difficult for the company to start making cars again. Apart from the difficult logistics of stopping and starting the giant machine (and storing stuff like paint in the meantime), there is the issue of suppliers: suppliers are being forced to stop work as well, as many are already owed by Chrysler. The risk is that some/many go under or stop working on what Chrysler needs. Just like the mighty Boeing Dreamliner which was delayed due to a shortage of bolts, the failure of a 2nd tier or 3rd tier supplier to Chrysler could further delay getting everything running again.
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