Auto Team: Chrysler Needs Bankruptcy, Fiat Deal

Administration offers 30 days more working capital before aid dries up
By Clay Dillow,  Newser Staff
Posted Mar 30, 2009 7:30 AM CDT
In this March 9, 2009 file photo, autoworkers leave the first shift at Chrysler's Warren Truck Assembly in Warren, Mich.    (AP Photo/Carlos Osorio, file)
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(Newser) – Chrysler cannot become viable on its own, says the White House's auto task force, recommending “quick and surgical” bankruptcy restructuring and the proposed Fiat partnership as the automaker's best shot at survival. The administration will provide Chrysler 30 days’ more working capital to finalize a deal, but the federal lifeline will then cease, the Wall Street Journal reports.

The team said Chrysler’s viability plans are based on "a number of assumptions that are unrealistic or overly optimistic," and the company is hobbled by a heavy dependence on North American buyers and a lack of fuel-efficient vehicles. Fiat’s managerial resources and fuel-efficient technologies could fuel a turnaround, but the report concludes that “the most effective way for Chrysler to emerge from this restructuring with a fresh start may be by using an expedited bankruptcy process as a tool to extinguish liabilities."