NEW YORK — With a government deadline seven days away, Chrysler is running out of time to work out deals with debtholders, unions and a foreign partner.
A life outside of bankruptcy appears to hinge on whether Chrysler and the U.S. government can get the company’s lenders to forgive a large portion of the company’s debt in exchange for stock. Both sides are far apart.
“I’ve said this is the equivalent of a 70-yard field goal,” Michael Robinet, vice president of global vehicle forecasts at CSM Worldwide, said of Chrysler meeting all its obligations.
The New York Times reported Thursday that the Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler under which the pensions and retiree health care benefits of the United Auto Workers union would be protected. The company would pursue a deal with Italian automaker Fiat while under bankruptcy protection. The lender issue remains unresolved, the newspaper reported.
Chrysler spokeswoman Shawn Morgan said in an e-mail that “it’s important to keep all options open.”
Its secured lenders consist of large and small banks and hedge funds that have poured about $6.9 billion into the Auburn Hills, Mich., company. Chrysler has been living on $4 billion in government aid since January.
