Chrysler is preparing to declare bankruptcy, if necessary. A Congressional vote on a federal bailout for the auto industry is expected this week. Both Chrysler and GM have said that they are at risk of collapsing this month without federal aid, and some observers have said the two companies may well collapse even with taxpayer funding. Chrysler, apparently, is making preparations for just that eventuality.
The Wall Street Journal reports, "Chrysler LLC has hired a prominent law firm to provide counsel on a possible bankruptcy filing, people familiar with the matter said, adding to concerns the auto maker could go into default by the end of the month." In a statement, Chrysler "confirmed it has retained Jones-Day and other outside advisors 'to provide a comprehensive independent analysis of the various options available to the company.'"
That analysis, according to Bloomberg, concluded that "Financing a bankruptcy by General Motors Corp. or Chrysler LLC would cost at least twice as much as the automakers say they need in U.S. government bailout loans."
The Washington Post's Frank Ahrens, however, is suspicious of the motivations behind the report. "You can take this one of two ways," he writes. Either "Chrysler has or is continuing to seriously consider bankruptcy," or "Chrysler doesn't want to declare bankruptcy and commissioned the study to prove how bad things would be if the company went bankrupt. This way, Chrysler's chances of getting federal bailout money likely would improve."
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