WASHINGTON — The Obama administration planned Wednesday night to send Chrysler into bankruptcy, replace chief executive Robert Nardelli and pump billions of dollars more into the effort, all in hopes it can emerge as a reenergized competitor.
Government officials clung to eleventh-hour hopes Wednesday night that bankruptcy could be averted, but talks broke down with creditors. A bankruptcy filing could happen today.
Under the administration’s court strategy, ownership of Chrysler would be dramatically reorganized, the leadership of Italian automaker Fiat would take over company management and the U.S. and Canadian governments would contribute more than $10 billion.
Company and government officials had feared that a bankruptcy would stain the brand, shake customer confidence and erode sales, but the administration said it would seek to use the process to create a new Chrysler company. Its ownership would be divided, with the company’s union retiree health fund receiving a 55 percent stake, Fiat would claim as much as a 35 percent share and the United States would take 8 percent. The Canadian government would receive 2 percent.
Holdings of the current majority owner, the private-equity firm Cerberus Capital Management, would be wiped out.
During the bankruptcy, the governments would provide about $4 billion, with 80 percent coming from the United States and 20 percent from Canada, which hosts a number of Chrysler operations.
Particularly striking to some economists and historians is that the plan gives ownership of a major U.S. industrial company to an employee-run trust, a deal that is “unprecedented on this scale,” according to Harley Shaiken, a University of California at Berkeley professor and expert on unions.
