Chrysler takes refuge in insolvency
Third-largest American auto manufacturer Chrysler sees insolvency as the best chance for a general corporate clear-out. This is without doubt the biggest bankruptcy of all time in the industry. President Barack Obama put a positive spin on the news, averring that the company would emerge much stronger from the process.
Italian carmaker Fiat is set to take an immediate 20% stake in Chrysler, rising to 35 percent at a later stage. Chrysler has lodged an official application with the courts and announced that production will generally cease for the time being. This will then only return to pre-insolvency levels once the process has been completed. Chrysler boss Bob Nardelli and his deputy Tom LaSorda will both resign. As already announced, the UAW employees' union will take a majority shareholding in the new Chrysler company. The whole insolvency process will be completed in record time, estimated at between 30 and 60 days. The US government is pumping in aid to the tune of around $8bn.
