Chrysler Has 30 Days to Get Its Act Together or Face Bankruptcy

Chrysler has 30 days to cut a deal with Italian automaker Fiat. The Obama White House said on Mar. 30 it has determined that Chrysler’s only avenue of survival is though an alliance with another automaker. Under any rescue plan, an Administration official said, Cerberus Capital Management (Chrysler’s owner) will have to forfeit its 80% equity stake in the carmaker, thought it will retain control of Chrysler Financial, the carmaker’s finance arm.

The White House auto industry task force said Chrysler’s restructuring plan submitted in February failed to convince the panel that it can be a stand-alone company. If Chrysler cannot strike deals with banks, which hold $6.8 billion in secured debt, and the United Auto Workers union, which is owed $8.8 billion for future health-care obligations, and reach an alliance with Fiat, the U.S. Treasury will cut off Chrysler’s financial support…[S]keptics predict bankruptcy. [via Businessweek]

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