Chrysler Creditors Agree to Deal With Treasury
By David Cho and Peter Whoriskey
Washington Post Staff Writers
Tuesday, April 28, 2009 11:39 AM
The Treasury Department reached an agreement with Chrysler's creditors late last night, but the automaker is still expected to be restructured in a bankruptcy, sources familiar with the matter said today.
The carmaker had owed a fractious group of 46 banks, hedge funds and other firms about $6.9 billion. These creditors have instead agreed to take $2 billion in cash at the end of the restructuring. It is unlikely that they will have an equity stake in the newly formed Chrysler, one of the sources said.
The agreement with the banks does not preclude Chrysler from bankruptcy, a senior administration official said today.
"Bankruptcy is not our goal," the official said. "It's not an ideal place no matter how surgical or quick you make it."
The two sides had been far apart in the negotiations, leaving Treasury officials little choice but to prepare a bankruptcy filing. Indeed, one government official said last week that it would take a "miracle" for a deal to be worked out. But the lenders realized that they would have received far less in a bankruptcy and ceded to government demands.
Chrysler also reached a deal over the weekend with the United Auto Workers, in which the union would own a majority stake in the automaker.
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