Chrysler bankruptcy to last years, not months

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More details are now emerging of the US government’s plans for Chrysler. Initially President Obama said he hoped the bankruptcy process would only last 60 days. But according to Bloomberg, the administration now accepts that this period will just cover the “sale of Chrysler’s best assets” to Fiat.

Suppliers, including those in the chemical industry, now face a potential double hit. First, they may not be chosen as a supplier to ‘new Chrysler’, given that this will be a much smaller entity. Second, if they are not chosen, their claims for previous supplies may take many years to be resolved. And cleani-up costs, for those factories that cannot be sold, will probably account for most of any money remaining for creditors.

Suppliers preparing their contingency plans for a possible GM bankruptcy will no doubt take note.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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