Can Chrysler escape liquidation?


When President Obama announced that Chrysler would file for bankruptcy, he gave it a positive spin. The basic idea was that with another $8 billion in U.S. loans -- bringing the total to $12 billion -- Chrysler could emerge as a division of Fiat with a cleaned up balance sheet in at most two months.

To be polite, that spin is a best case scenario. Other scenarios include Chrysler takes a year or two to emerge from bankruptcy, or the bankruptcy court liquidates its assets to settle with creditors. I'd guess the second scenario, a longer bankruptcy, is most likely.

Chrysler, which makes Chrysler, Dodge, and Jeep brands, employs many people. It has 39,000 employees and 3,300 dealers which employ another 140,000 and its Chrysler Financial has 3,400 workers. It filed for bankruptcy because a handful of hedge fund honchos were not happy with the U.S. government's settlement offer.