Blog

An Automaker’s Life After Chapter 11

After struggles and difficulties keeping up with its competitors, The Chrysler Group, LLC, after filing for bankruptcy, is just now starting to come back to life. Last April, 2009, Chrysler filed for Chapter 11 bankruptcy protection and presented a partnership plan with Fiat, an Italian automaker.

Then, a couple of months later, Chrysler announced they were selling assets and operations to the newly formed company, Chrysler Group, LLC while Fiat was given a 20% stake in the new company; with an option to increase to 35%, and eventually 51%, if it met company financial and developmental goals.

Not too long ago, while General Motors Corporation made headlines for its own bankruptcy filing and reorganization, Chrysler fought with itself to develop a master plan for its operations. Now, a year after crawling to the surface from bankruptcy, Chrysler is starting to show signs of recovery—thanks in large part to Fiat, who basically took over while Chrysler struggled.

Chrysler was founded in 1925 and from 1998-2007, it and its subsidiaries were all a part of DaimlerChrysler AG, a German entity. In ’07, DaimlerChrysler sold 80.1% of Chrysler Group to a private equity firm. Two years later, Daimler rid of its 19.9% share and paid approximately $600 million towards Chrysler’s pension fund, as part of an agreement with Cerberus Capital Management, LP, whom bought the 80.1% in ’07.

By June of last year, most Chrysler assets were sold to the “new Chrysler.” Then, the Feds stepped in and financed a deal worth $6.6 billion in financing which was paid to the “old” Chrysler—which was in Chapter 11 bankruptcy.