Tuesday, February 10, 2009
Chrysler Bankruptcy News:Analysts Say Carmakers' plans need more time
March 31 deadline too soon to get bondholders on board with Chrysler, GM changes, they say.
Alisa Priddle and David Shepardson / The Detroit News
As General Motors Corp. and Chrysler LLC are scurrying to put the finishing touches on their restructuring plans due next Tuesday to the Treasury, finance and auto industry experts say submitting plans is one thing, but getting bondholders and all other parties involved in a massive restructuring to agree to those plans by the March 31 deadline seems unrealistic.
Meanwhile, GM CEO Rick Wagoner lobbies key lawmakers in Washington today to ease the way for GM's plan.
"I wouldn't be surprised if the timetable got extended, because clearly the original plan was a temporary fix," said Mark Oline, a Fitch Ratings analyst in Chicago. "It was going to be up to the new Congress and Administration to put in a longer-term solution."
Auto analysts and bankruptcy lawyers say the deadline set out in the federal bailout of the automakers is too ambitious to get bondholders on board in just a few more weeks. They say GM in particular needs an extension to avoid being forced into bankruptcy if it can't show progress on its assignment to cut $27.5 billion of unsecured debt down to about $9.2 billion by the end of March.
The concern centers around GM because the public company has many junk bonds and unsecured creditors, said Judy O'Neill, partner with Foley & Lardner LLP's Detroit office and an expert on Chapter 11 bankruptcy....More