Chrysler bankruptcy could be protracted - Moody's 05/05 02:17 PM
* Bankruptcy unlikely to be a short trip-Moody's
* Chrysler proceedings to impact GM restructuring
DETROIT, May 5 (Reuters) - Chrysler's bankruptcy filing is unlikely to be a short process and could be more complicated, contentious and protracted than the U.S. government anticipates, Moody's Investors Service said on Tuesday.
Filing for bankruptcy last week after failing to gain full support from its secured lenders for a proposed debt restructuring, Chrysler and the U.S. government said the bankruptcy would be completed in 30 to 60 days.
But Moody's said the proceeding could be hotly contested and drawn out because of the bankruptcy code that ensures procedural fairness for all creditors with an interest in the bankruptcy estate.
A group of dissenting lenders have already sought to block Chrysler's planned alliance with Fiat SpA (FIADF:$10.8400,$-0.0100,-0.09%) <FIA.MI>, a critical element of the U.S. automaker's emergence from Chapter 11 bankruptcy.
"At this point, it is difficult to make any predictions other than that the process is likely to take considerably longer than the 30 to 60 days projected by the administration," Moody's said in a note to clients.
The continuing decline in the fortunes of the U.S. auto industry and the revenue pressure Chrysler might face in the wake of bankruptcy could further complicate the proceedings, the ratings agency said.
Chrysler's bankruptcy, one of the biggest U.S. public company bankruptcies ever, is widely seen as almost a dry run for a potential reorganization of General Motors Corp (GM:$1.83,00$0.02,001.10%) .
GM, which like Chrysler is surviving on government bailout money, faces its own restructuring deadlines on June 1 and is trying to win sweeping concessions from bondholders and the United Auto Workers union.
Moody's said the bankruptcy court's determinations in the Chrysler case and the time frame necessary to conclude the proceedings could well determine the degree to which GM's various constituents, including the government, view bankruptcy as an effective path for GM.
"The ongoing resolution of the Chrysler bankruptcy process will have an important impact on the behavior of GM's constituents ... and on their respective willingness to make concessions necessary to avoid a bankruptcy filing," it said. (Reporting by Soyoung Kim; Editing by Richard Chang) |
