There still is time, but right now it's not looking good.
Chrysler’s fate was in the hands of about 40 hedge funds that hold about 30% of its debt. Although four banks holding 70% of the debt had agreed to erase it for $2 billion, the hedge funds were holding out for a better deal.
To entice the hedge funds into going along with the banks, the government on Wednesday afternoon added $250 million to the $2 billion that the banks had settled for and gave the hedge funds a 6 p.m. deadline to work it out, two people briefed on the talks said.
But several of the funds came back with their own different counterproposals, leaving the Treasury Department to bargain with 46 funds, the person said. Treasury extended the deadline into the evening, but, when it appeared there was no central authority to negotiate with, decided to end talks around midnight.
The deal was sweetened, and they still said no. Chrysler will go on, it's just going to be... complicated, to say the least. Send in the lawyers.
Government officials have insisted that Chrysler could go through a "quick rinse" or "surgical" bankruptcy filing under Section 363(b) of Chapter 11 of the bankruptcy code, allowing for a quick asset sale that could allow the healthy parts of the automaker to emerge in as little as 30 days.
And then you guys can fight over what is left. Hope it costs you lots of money. In a nutshell...
The U.S. Treasury would loan Chrysler billions in debtor-in-possession financing -- a major hurdle for Delphi -- so that Chrysler could operate under court protection and would buy the "good" Chrysler, forming a new company.
The "bad" Chrysler, including some dealer agreements and other debts, would remain in bankruptcy and be liquidated over months or years.
And just think, we get to go through all of this again with GM - a much bigger monster, indeed.
No one knows what this is going to look like when it's done, so I'll be damned if I try to guess at this point. The deadline is 11:59 PM tonight... maybe there is another miracle in there, but don't hold your breath.
Just another white-knuckle day in the state of Michigan. Do you ever get the feeling that we are turning into a bunch of adrenaline junkies?