Detroit automaker Chrysler announced today that it will enter into Chapter 11 Bankruptcy.  The troubled car manufacturer will not, repeat will not being going out of business. Rather, Chapter 11 of the Bankruptcy code allows for companies to restructure their finances, with a bankruptcy judge ruling to shed certain liabilities and assets in order to turn the company into a more viable organization moving forward. Chrysler will also enter into a partnership with Italian automaker Fiat as part of the bankruptcy.

The initial word from the Federal Government Auto Task Force assembled by President Obama is that the bankruptcy proceeding is going to be very good for Chrysler employees in the United Auto Workers (UAW) Union.  Concessions that the UAW gave up on wages and pensions will be converted into stock in the corporation itself, which will in turn give UAW workers more than 50% of the outstanding shares of the company once it emerges from bankruptcy.  Also, no UAW members will be losing their jobs as a result of the bankruptcy.

However, the good news won’t be carrying over to the investment firms which were bankrolling Chrysler.  Indeed it was these very firms’ unwillingness to compromise and restructure the terms of their investments in the company that landed the affair in bankruptcy court.  Now their shares in the pie will be sliced down by a judge in the interest of keeping the company solvent going forward.  Let’s look forward to a leaner, meaner, majority employee owned Chrysler in the days ahead.

LINKS:

UAW: UAW members ratify Chrysler agreement

CNN: Obama confirms Chrysler bankruptcy, blasts investor group

NY Times: The Chrysler Bankruptcy