Chrysler files to clear way for Fiat alliance
Chrysler has filed for court protection to reorganise its US operationUS car giant Chrysler has filed for bankruptcy under US provisions in the first step on the road to an alliance (read: takeover) by Fiat. The announcement was made last night in the USA and is the result of months of negotiations involving the companies, US labour unions, creditors and investors and the US government.
Chrysler has filed under Chapter 11 of the United States Bankruptcy Code. Such filings are usually categorized as "reorganisation" bankruptcies. Under the provisions of Chapter 11, companies are protected from wind up actions by creditors and allowed time under court protection to reorganise their business and/or capital structure.
Unlike a liquidation, Chapter 11 allows companies to continue trading.
This is exactly what Chrysler says it will do both in the USA and via its international operations. Although US reports suggest the company will idle its 12 plants during the Chapter 11 period (expected to be 30-60 days), this decision has much to do with addressing bloated new vehicle inventories as any other factor.
The Chrysler reorganisation will also see current CEO Bob Nardelli step down (see below).
Chrysler says the Chapter 11 filing is also necessary for the Chrysler/Fiat Group alliance to proceed.
In the local Australian arena no immediate effects will be felt. Chrysler Australia chief Gerry Jenkins will brief local media today, however, a statement this morning confirms none of Chrysler's operations outside the USA are affected by the bankruptcy filing.
Chrysler spokesperson Jerry Stamoulis told the Carsales Network this morning: "Chrysler's international operations such as Chrysler Australia and New Zealand are not part of any bankruptcy filing.
"Chrysler ANZ continues to market, sell and service Chrysler, Jeep and Dodge vehicles and also honour the warranties of our vehicles. As an international company, we continue to market, sell and service our vehicles in all our markets."
For the purpose of clarity we have reproduced Chrysler's official release on the filing and the Fiat alliance below. More news on the filing later today.
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