Chrysler Creditors Strike Deal to Avoid Bankruptcy

By Kevin Spak,  Newser Staff
Posted Apr 28, 2009 10:07 AM CDT
Chrysler headquarters are shown in Auburn Hills, Mich., Monday, April 27, 2009.   (AP Photo/Paul Sancya)
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(Newser) – The Treasury Department struck a deal with Chrysler’s creditors last night to avoid what had looked like a probable bankruptcy, the Washington Post reports. The creditors, a disparate group of 45 financial firms, agreed to write down all but $2 billion of the $6.9 billion Chrysler owes them, in exchange for a 10% stake in the automaker.

Creditors had been looking for far more money—so much so that one official said it would take a “miracle” to get a deal done—but they eventually realized that they’d make less in bankruptcy court. Chrysler’s restructuring is now all but settled; a deal is in place with the United Auto Workers to give the union 55% of the company in exchange for cost concessions, with the remaining 35% tentatively going to Fiat.