Jeff Marwil, a partner at Proskauer Rose LLP, says bankruptcy won't be a joyride for Chrysler LLC and its filing will echo throughout the industry, even if the process takes the planned two months President Obama mentioned in a speech Thursday. The automaker drove into Chapter 11 protection shortly after the presidential address when a last-minute
scramble to get the automaker's lenders to agree to an out-of-court
restructuring proved unsuccessful. (See full story in The Deal Pipeline.)
"There will be collateral damage throughout the industry," Marwil said. "General Motors has already announced it would shut down for nine weeks too. The auto suppliers will suffer, and Chrysler and General Motors will likely notify these suppliers if they are necessary or not during this time."
In fact, an auto parts supplier, Delphi Corp., offers a glimpse into what ultimately could happen to Chrysler and General Motors Corp. (NYSE:GM) in bankruptcy if the worst-case scenario develops, warns Marwil.
"I think it is idealistic that Obama thinks this bankruptcy can be finished within 60 days. I think the hedge funds will fight to recover their fair share. Look, Delphi is going on three years on the bankruptcy process. These lenders are not going to back down," he said.
Marwil had predicted back in January in a Deal Video segment that the auto bailout would not be sufficient in stabilizing Chrysler and GM and that bankruptcy was necessary. (See video below.) Marwil still thinks bankruptcy is inevitable for GM and predicts that it will file a month from now. - Maria Woehr
Jeff Marwil, a partner at Proskauer Rose LLP, says bankruptcy won't be a joyride for Chrysler LLC and its filing will echo throughout the industry, even if the process takes the planned two months President Obama mentioned in a speech Thursday. The automaker drove into Chapter 11 protection shortly after the presidential address when a last-minute
scramble to get the automaker's lenders to agree to an out-of-court
restructuring proved unsuccessful. (See full story in The Deal Pipeline.)
