Chrysler Near Chapter 11 Bankruptcy Filing

by Shu Zheng

(WSJ) - Chrysler LLC is preparing to file for Chapter 11 bankruptcy protection as soon as next week, whether or not it reaches a deal with its lenders or forges an alliance with Fiat SpA, said several people familiar with the matter.

If an agreement with the car maker's lenders can be reached, Chrysler would file for bankruptcy protection to rid itself of some liabilities. That would let Fiat pick and choose which operations it wants, these people said. The U.S. government would provide bankruptcy financing while the reorganization plays out.

The United Auto Workers union is on board with the plan and likely would end up owning a sizable stake in the restructured car maker, said these people.

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Detroit Courts Prefer Any Auto Bankruptcy to be Handled Locally

Article by Jonathan D. Glater and Micheline Maynard
Posted by Kaitlin Lanier

Detroit, which could lose an automaker to bankruptcy, hopes to console itself with a big piece of the legal action.

The bankruptcy court in the Motor City is making itself as attractive as possible should General Motors or Chrysler file for Chapter 11 protection, and it appears to be in the running.

At stake may be crucial decisions on how employees and others will fare in a restructuring. And the depressed Michigan economy could also benefit from all the hotel and restaurant revenue brought in by out-of-town lawyers, researchers, journalists and their support teams.

The established forums for big corporate cases are in Delaware, where many businesses are incorporated, and New York. The two locations have been home to six of the 10 biggest bankruptcy filings, including Lehman Brothers, Washington Mutual, WorldCom and Enron, according to BankruptcyData.com.

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