WGRZ - TV, May 1, 2009, Friday

WGRZ - TV

May 1, 2009, Friday

WGRZ - TV

Chrysler Gets U.S. Financing For Bankruptcy

The Associated Press reports the Obama Administration will provide Chrysler Corporation with an additional $ 8 Billion in government financing for its bankruptcy.

The White House had hoped to stave off bankruptcy for Chrysler but there was no agreement on debt reduction before the deadline. President Obama is confident the 85 year old firm can revive through the new alliance with Italian automaker Fiat. Fiat will get a 20 percent stake in the firm in return for providing Chrysler with access to its fuel efficient technology. Some Fiat vehicles may also be made and sold in the U.S. through a restructured Chrysler.

Chrysler is the smallest of the Detroit Big Three but one local auto industry analyst feels it may set a pattern for a potential bankruptcy for General Motors. GM has a significant presence in Western New York through the Powertrain Plant in Tonawanda and major supply firm Delphi in Lockport. Delphi is a former GM subsidiary which is currently in bankruptcy.

Art Wheaton of the Cornell University School of Industrial and Labor Relations says the Chrysler agreement may show how the United Auto Workers, creditors, and the government can work out a deal. Wheaton says there will be no partner like Fiat for GM but it may also be forced to significantly reduce its dealerships to cut costs.

CNBC also reports that auto dealers affiliated with Chrysler and GM have hired law firms to represent their interests in any government directed restructuring plans.

GM faces a June 1st deadline to work out an agreement with its creditors or it may be forced into bankruptcy as well.