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At a mid-day press conference President Barak Obama made the official announcement that Chrysler will in fact file for Chapter 11 bankruptcy protection. Included in the announcement was the news that Chrysler has also reached an agreement with Fiat.

"I can report that the necessary steps have been taken to give one of America's most storied automakers a new lease on life," Obama said.

Praising Chrysler's storied history and saying that the company helped make the 20th Century an American Century, he also chastised the numerous poor decisions made by all parties involved. Chrysler has "for too long, moved too slowly, building less popular cars, that are less reliable and less fuel efficient," Obama said.

The President praised Chrysler management, the UAW and the company's major lender JP Morgan for their "unprecedented sacrifices," and blasted the small group of holdout hedge funds that have refused to budge and accept the Federal government's offer. That offer would see the U.S. government pay out lenders $2 billion in cash for $6.8 billion in debt.

The official Chapter 11 paperwork is expected to be filed as early as today and in the restructuring process the Federal government will provide additional loans to Chrysler. Those loans are not open-ended, however, and will have to be repaid in full before Fiat can take a majority stake in the U.S. automaker.

In the mean time Chrysler operations are expected to continue as normal with one major change. The finance arm of General Motors, GMAC, will finance car loads at the dealership level.

More: Chrysler Officially Bankrupt: Merger With Fiat A Done Deal (http://www.autoguide.com/auto-news/2009/04/chrysler-officially-bankrupt-merger-with-fiat-a-done-deal.html) on AutoGuide.com

Here's a copy of the email sent to all MOPAR Dealers:


April 30, 2009

Dear Chrysler LLC Dealer

Earlier today, Chrysler LLC announced that as a result of the comprehensive restructuring plan agreed to by many of our stakeholders, we have signed an agreement in principle to establish a global strategic alliance with Fiat SpA to create a vibrant new car company. This alliance will provide the new company access to high-quality, environmentally friendly and fuel-efficient small and compact segment vehicles, as well as exciting products and platforms, technology, and a wider global distribution network. This partnership not only will transform Chrysler into a stronger car company with many strategic advantages, it will enable us to better serve you and our customers with a broader and more competitive line-up of vehicles. I am very pleased that with the support of the U.S. and Canadian governments, Cerberus Capital Management, LP, Daimler AG, the UAW and CAW leadership, employees, suppliers, our new partner Fiat, and you, our dealers, we can now look forward to the future with a true sense of optimism and possibility. For the past several months we have worked tirelessly to reach agreement with key stakeholders on concessions that would allow Chrysler to complete this alliance with Fiat without the need for a bankruptcy proceeding. Despite substantial progress on many fronts, we were not able to obtain the necessary concessions from certain lenders. As a result, to facilitate our alliance with Fiat and the agreements with key stakeholders, Chrysler and 24 of its wholly owned U.S. subsidiaries today filed voluntary petitions for a structured bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York. Here’s what is meant by a “structured” bankruptcy: With this filing, we have also submitted a motion under Section 363 of the Bankruptcy Code, a provision that allows a company to enter a court-supervised process to sell its assets quickly and in an orderly manner as the best way to preserve and maximize value for stakeholders. We filed this motion requesting the swift approval by the Court of the agreement with Fiat and the sale of Chrysler’s principal assets to a new company. Utilizing this provision will allow us to emerge a stronger, leaner, more competitive company.


Although complete agreement was not possible, we understand and appreciate the deep sacrifices made on the part of many of our stakeholders, including dealers like you. In order to create this new company, we will use this structured bankruptcy to swiftly implement tough but necessary changes, including: the agreed upon wage and benefit structure for active and retired employees that is competitive with those of transplant manufactures; a reduction of debt and interest expense; disposition of idle assets; sound agreements with suppliers and rationalized and more efficient dealer network. In the days and weeks ahead we will continue to keep you informed of our progress.

Throughout this process Chrysler will honor all warranties for new vehicles and service contracts for Certified Pre-Owned Vehicles. Chrysler will continue to produce and support quality vehicles over the long term, under the Chrysler, Jeep® and Dodge, brands and parts under the Mopar® brand.
Chrysler has signed a financial services arrangement in principle with GMAC to become the primary retail and wholesale lending company. As of May 1, GMAC will be the preferred lender for your dealer and consumer business, including wholesale new and used vehicles as well as retail. GMAC will be able to offer the best long-term finance options for your business and our customers, and is established as a bank holding company with access to a variety of funding sources. There will be a natural wind down of Chrysler Financial business, which includes existing dealer floor plan units staying with Chrysler Financial.

As a part of the restructuring, most manufacturing operations will be temporarily idled effective Monday,
May 4, 2009. Normal production schedules will resume when the transaction is completed, which is anticipated within 30 to 60 days.

To ensure business will continue without interruption for our customers as well as our dealer Sales and Service centers, Chrysler also filed “First Day” motions with the court, seeking relief to honor and pay post-petition obligations to employees, suppliers, and dealers as an essential component of preserving ongoing value. We expect to receive approval for these motions within the next few days.

Again, I thank you for your service and commitment to Chrysler.

Sincerely,

Bob

.....and there you have it. All is well. We're still breathing! :D

Should have filed chapter 11 before taking that loan from the government. We all knew it wasn't going to be enough to avoid this. Even if the restructuring works, the government still has them by the bawls and will be directing them what to manufacture and what not to. Sad times indeed.