Chrysler Hires a Bankruptcy Firm, Report Says
By Michelle Krebs December 5, 2008Chrysler LLC has hired the prominent law firm Jones Day as bankruptcy counsel, several unnamed people apparently familiar with the matter told the Wall Street Journal. The firm was hired several weeks ago to help the ailing auto maker prepare for a possible Chapter 11 bankruptcy filing.
Neither Jones Day nor Chrysler commented to the Journal about the report.
The Wall Street Journal speculates that Chrysler's move suggests the automaker is preparing for imminent financial failure should its efforts to persuade Congress to deliver federal rescue funds fall short.
Detroit automakers are lobbying Congress for $34 billion in government loans to stay afloat. Chrysler, which is majority-owned by private-equity firm Cerberus Capital Management, says it needs $7 billion before year end. The automaker testified in Congress this week that it will end the year with only $2.5 billion in cash.
The Journal reports Jones Day co-head of restructuring Corinne Ball is handling the case. She has worked on other automotive bankruptcies, such as that of auto-parts supplier Dana Corp., and many cases involving the United Auto Workers union. She represented GM in its acquisition of Korean auto maker Daewoo. The firm also worked with GM and Chrysler on a possible merger of the two companies earlier this fall.
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