More ‘icing’ on the Devil’s food cake

The Treasury Department is preparing a bankruptcy filing for Chrysler, the New York Times reports, though it wasn't immediately clear how serious the Obama Administration is about following through with that plan.

The Times, citing sources with knowledge of the process, reports that an agreement was reached with the United Automobile Workers union to protect pension and retiree health care benefits in the planned Chapter 11 filing, which could come next week.

An administration official reached by FOX Business urged caution on concluding a bankruptcy was imminent.

http://www.foxnews.com/politics/first100days/2009/04/23/report-obama-administration-preparing-bankruptcy-filing-chrysler/

The only major question that remains unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler. Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake.

If no agreement is reached between the government and Chrysler’s lenders, a nasty legal fight could emerge in bankruptcy. The creditors’ claims are backed by most of the company’s collateral, including plants, brands and equipment, and the senior lenders will argue that they have first claim on those assets — even over and above the government’s debt.

http://www.msnbc.msn.com/id/30366383/