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Extra5/1/2009 12:01 AM ET

Chrysler bankruptcy filing fallout

Chapter 11 is a last-resort attempt to revive the carmaker's flagging fortunes. Here's a quick look at how Chrysler's employees, dealers, customers and creditors are affected.

By MarketWatch

Now that Chrysler has been hauled off to bankruptcy court, what will happen to the automaker's various stakeholders? While details are still being hammered out, the general drift is fairly straightforward.

Chrysler on Thursday said it was filing for Chapter 11 bankruptcy protection from creditors. That means it will continue operating under the oversight of a federal bankruptcy court judge while it works out a financial restructuring plan that allows it to emerge from bankruptcy as a viable company.

Here's a quick take on the significance of Thursday's news to the various stakeholders.

Investors: For shareholders, the Chapter 11 filing means nothing. There are no individual investors. Chrysler is owned by Cerberus Capital Management, one of the world's biggest private investment companies. Cerberus bought an 80% stake in Chrysler from Daimler (DAI, news, msgs) in 2007. Daimler bailed out of its 20% stake on Monday

Creditors: It's a different story for bondholders, who have rejected an offer of 33 cents for every dollar of Chrysler debt they own. Chrysler's overall debt stands at about $6.9 billion. If a deal with debt holders can't be worked out during the bankruptcy reorganization, the bondholders could torpedo the whole effort. That could force Chrysler into Chapter 7 liquidation, in which it would sell off its assets and shut down completely.

Dealers: Chrysler dealerships will keep their doors open. In fact, as part of the deal, GMAC -- in which Cerberus holds a big stake -- agreed to help consumers finance their purchase of new Chrysler vehicles.

But the number of dealerships will likely be winnowed down as part of the restructuring to bring sales outlets more in line with demand.

Employees: After several rounds of layoffs, there are about 54,000 Chrysler employees. Bankruptcy does not protect their jobs, but those who remain on the payroll will continue to receive paychecks. However, bankruptcy will almost certainly mean further concessions from union workers on pay, vacation, health care and pensions.

Consumers: Chrysler, Jeep and Dodge warrantees will be honored. In fact, they are now technically backed by the federal government. Replacement parts will still be available and dealership mechanics will still carry out maintenance and repairs, the idea being that these services are essential if there's any hope of luring new customers.

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Fund data provided by Morningstar, Inc. © 2009. All rights reserved.
StockScouter data provided by Gradient Analytics, Inc.
Quotes supplied by Interactive Data.
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Thursday, April 30, 2009 9:23:18 PM
Open-mouthedGreat to see Nardelli take another company down the tubes. Wonder how many millions this endeavor has been worth to him and his cronies. He is one of Americas most talented gangsters. Thanks Bob!!!
Friday, May 01, 2009 7:40:31 AM
Yawn.  Just another business day.  This TOO SMALL to pay for any TOO BIGS is going to work on her garden.  Lots more productive--and the return is pretty decent too!
Saturday, May 02, 2009 9:25:53 AM

The UAW auto contract is/was over a thousand pages which included their right to receive almost full pay for workers to watch

TV and sleep at robber wage rates. They had the right to tell

management which models would be built at which plant! They

hammered management (they are stupid too) so had they (UAW)

killed the goose that laid the golden egg! THE POX ON BOTH

OF THEIR HOUSES AND THE GOVERNMENT TOO, THAT IS POURING

BILLIONS OF OUR TAX DOLLARS DOWN A SINK HOLE! The whole thing is sick! 

Sunday, May 03, 2009 1:41:01 PM
Maybe some anger management needed there lodialfi?
Monday, May 04, 2009 6:27:26 AM
I am terrible at looking into the future and predicting reliable results, so I have little insight as to what is going to happen tomorrow. I will leave those predictions to the legions of stock pundits who clutter up the air waves on a daily basis with their predictions. What I am good at is looking at an individuals past record for failure or success and predicting the direction they will take when they are given the responsibility for guiding a viable companys future. I watched with interest how Home Depot went from being a top notch growth company and was transformed to a third rate, debt ridden has been. Service in their stores went from top notch to last in class. When Home Depot boardmembers finally came to their senses and removed Mr. Nardeli from his leadership position, it was too late as the damage had already been done. Then along comes Cerberus Capital and they hire him to run Chrysler. I don't think I would want taking down two big businesses on my resume when I send out feelers for my next big job, but that is just me. Congratulations Mr. Nardeli as you have joined a very exclusive club in America. There are very few individuals who have put not just one, but two companies into bankrupcy and lived to tell about it. Disgusting to say the least.
Monday, May 04, 2009 3:11:24 PM
No one is talking about the consumer.  All this financial, political and legal gyrations must end up on consumers wanting to buy Chrysler cars:  Recent history is they don't.  The problem with government running anything is that bureaucracy tends to focus on process.  More than anything Chrysler is a sales organization; they must sell what they produce .  It won't happen in the near term.  My guess is Chrysler won't be around two years from now. 
Tuesday, May 05, 2009 10:44:09 AM

Standard of living have been falling out off control and need to reform consumer prices when wages and benefits had cut down.  No way, people can effort to buy anything, not balanced at all.

Consumer prices should be in control and wages, benefits should put back as normal, so people can keep up.  We, people will not spend money for next four years and just save money to pay for houses and eat less just for surviving.

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