The Chrysler sale has closed.
Now the rejected dealers, underpaid secured lenders, and other unsecured creditors can file their proofs of claim and wait to see if there is anything left in "old Chrysler" to make any sort of a distribution. If there is not some hope of value in the near term, we may be looking at a conversion to chapter 7.
My own research shows that liquidation in chapter 11 is highly preferable for the unsecured creditors, as the mean and median distribution in chapter 7 is 0%. Of course, that option is only available if there are funds to pay for it — Jones Day is not going to work for free.
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3 responses to “42 Days and Out”
Neither will Capstone or the i-bankers.
Given that the $2 billion Fiat Alliance payment only covers about 1/3 of the secured creditors’ claims and that the deal took away most of the assets, is there any hope for the unsecured creditors even in Chapter 11?
It depends on where the value is — the remaining plants are probably subject to the creditors liens. There may be other assets that are not subject to the liens. To the extent the lenders have a deficiency claim, they are simple unsecured creditors along with the rejected dealers, etc. As indicated in the post, I would not be surprised if this ended up in chapter 7 — perhaps in a few weeks, once the professionals get a handle on “what there is.”