Chrysler hires Law Firm as Bankruptcy Counsel

[XDCX]

The Wall Street Journal is reporting that Chrysler has hired the law firm Jones Day to advise them on bankruptcy options in the event the Congressional Hearings are not successful.

Here's a link to the news report: http://online.wsj.com/article/SB122849949643583239.html?mod=googlenews_wsj

Just another piece of bad news in what has become a non-ending stream. :(

[Stlcarguy]

Well needless to say that is not good news but not unexpected either I must say. I'm thinking that if they file for bankruptcy will this not enable them to restructure the present agreement with the UAW? I would think the company could save millions upon millons with not having to pay someone $30.00 an hour to put on lug nuts. Well hopefully it won't come down to this but who knows anymore with the way this economy is going.

[XDCX]

Well needless to say that is not good news but not unexpected either I must say. I'm thinking that if they file for bankruptcy will this not enable them to restructure the present agreement with the UAW? I would think the company could save millions upon millons with not having to pay someone $30.00 an hour to put on lug nuts. Well hopefully it won't come down to this but who knows anymore with the way this economy is going.

Chrysler's spin is that they contacted the Law Firm after the last round of hearings to address their critics concerns. Chrysler indicates that the retention of the Law Firm should not imply that they're going to file for bankruptcy.

I'm convinced that bankruptcy of the OEMs would be disastrous for the dealers - many would go out of business due to cash flow issues. In fact, I've read one story that suggested the reason that AutoNation has attracted more investments is because they could actually benefit from an OEM bankruptcy. The theory is that AutoNation would be able to keep their dealerships operational during bankruptcy while their neighboring dealers went out of business.

[Stlcarguy]

Your point about the Autonation buy in by Mr. Gates is very interesting. I would have to agree that Autonation would be able to survive just about anything the economy could throw at them. Doesn't seem fair when a company has that kind of money backing them. I assume they have no problems with financing either wonder if they do in house financing?LMAO

[XDCX]

Your point about the Autonation buy in by Mr. Gates is very interesting. I would have to agree that Autonation would be able to survive just about anything the economy could throw at them. Doesn't seem fair when a company has that kind of money backing them. I assume they have no problems with financing either wonder if they do in house financing?LMAO

I totally agree that it's not fair, but there's no question that AutoNation could better survive a Detroit 3 bankruptcy than your average dealer.

For most private capital dealerships the loss of cash flow would put them out of business in short order. AutoNation, by contrast, has a complete legal staff on retainer that could forestall the foreclosure process.

There's no question that the car business will survive and the dealers that are still around in 2010 will probably make some good money. The challenge, as I see it, is trying to survive until 2010. :)