Chrysler to file for bankruptcy30 April 2009
US car maker, Chrysler is to enter bankruptcy protection after failing to persuade a number of hedge funds to write off its debts, a White House official has said.This is a further blow to many supplier companies including upholstery leather tanners in what has been a very difficult period particularly since October of last year.
President Barack Obama is due to make a statement shortly on the future of the struggling US carmaker. Chrysler has been in last minute talks to restructure the business before a midnight deadline.
President Obama has already said that Chrysler would emerge stronger after any move into bankruptcy protection.
The US government had told Chrysler it would be given a further $6bn of vital state loans if it had successfully restructured the business by midnight.
This included trying to persuade the firm's main lenders to accept $2bn in cash, in exchange for writing off all of Chrysler's $6.9bn secured debt.
While Chrysler's main banks, holding 70% of the debt, accepted this proposal, it was reportedly rejected by hedge funds that hold a sizeable proportion of its remaining debt. Hedge funds are private investment funds that typically attract rich private investors.