The New York Times reports that the auto taskforce is preparing to file bankruptcy papers for Chrysler as early as next week and that they have negotiated many of the details with the union already:
The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that could come as soon as next week, people with direct knowledge of the action said Thursday.
The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing, said these people, who asked for anonymity because they were not authorized to discuss the case.
Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.
The article says that the issue of what happens to the almost $7 billion in loans made to Chrysler by various banks and investment funds is still unresolved as the two sides are still far apart in negotiations. The government rejected the debtholders’ latest offer yesterday.