After talks with creditors collapsed last night, a Chrysler bankruptcy appears all but certain by the end of the day. Although much of Chrysler's debt had been renegotiated, several private investment firms still hadn't agreed to a deal.
Most reports say that the government is hoping for what is being called a "surgical" or "quick rinse" bankruptcy. There's only one problem with that idea: there's no such thing.
At least that's the opinion of the prominent Michigan law firm of Plunkett Cooney. It held a conference call two weeks ago to discuss GM's possible bankruptcy. Among other things, it said the government made up the term "quick rinse" as it's not a term bankruptcy courts have ever used.
It also cited several recent examples of large companies that went into bankruptcy court and none of them could be considered "quick" or "surgical". The closest thing to it was Mrs. Fields cookies which declared bankruptcy last August. It took 7 months to resolve that one.
AutoObserver: GM "Quick Rinse" Bankruptcy Risks "Rinse and Repeat"
Detroit News: White House plans bankruptcy for Chrysler
stephen987 says:
07:42 AM, 04/30/09
The longer it takes, the more times customers will see the words "bankruptcy" and "Chrysler" in the same headline. The more times that happens, the less likely the company will recover.
jederino says:
10:38 AM, 04/30/09
Lawyers run the government, and wrote the rules for bankruptcy. Who's gonna win this showdown? Lawyers! Who will likely lose? Investors and consumers.