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Bleeding dealerships and death threats

By Samantha Stevens, 06 May 2009 Industry

Bleeding dealerships and death threats

The latest update in the Chrysler bankruptcy saga.

Chrysler is allegedly losing between 30 to 40 dealerships each month in the USA, with fewer than 3,200 remaining in business.

The Detroit News reports that dealership incentives will be halved by June. And without the incentive plans, the dealerships are dropping like flies.

The most recent round of cash bailouts - a further US$4.5 billion in federal U.S. and Canadian loans approved at Monday's bankruptcy hearing - will probably never be repaid, despite the beleaguered company asking for the government to forget about the US$4 billion loan from January. This comes on top of further salary cuts with workers asked to take a fortnight-long unpaid holiday to save US$21 million on wages, and news that New Treasury Department regulations will apparently set a cap of $500,000 a year for the new CEO and top 25 execs for any company receiving the industry bailout funds.

Chrysler will return to court this week to discuss payments of US$6.9 billion owed to its major (first lien) creditors. While both Chrysler and the Obama administration want a quick settlement to keep Chrysler afloat and operating, the proceedings in New York have been slowed by some of these first lien creditors.

Reuters reports that a group of creditors, who want the maximum amount of their money back and fear a quick bankruptcy solution would reduce their return, are stalling the bankruptcy hearings. Apparently fearing the loss of their legal rights and even death threats if their identities are revealed. However, the Manhattan court has given the group if objecting creditors until this morning to reveal their identities, or agree to allow the proceedings to continue at warp speed.