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Cashflow Crisis At Chrysler?

Published June 12, 2008

Original publication date:  June 12, 2008.

I have previously written blog articles about part shortages at GM and Chrysler, and have speculated about what would happen in the event of a GM bankruptcy. Now, a reputable industry blog, The Truth About Cars, is reporting a rumor that Chrysler is having short term cashflow problems. Suppliers are apparently being given an across the board 5% payment reduction, and payment has been delayed from 45 days after delivery of parts to 60 days.

The blog article further speculates that Chrysler's owner, private equity fund Cerebrus, is unlikely to infuse cash into the company.  This leads the author to conclude that Chrysler will file for bankruptcy by August, in addition to a false conveyance lawsuit against Daimler, which sold the troubled automaker to Cerebrus last year.

So far, I haven't seen anything unusual in my dealings with Chrysler.  In fact I was pleasantly surprised recently when checks for one of my Chrysler settlements came quicker than expected. 

Nobody really knows how this will work out, but I will say that I would be shocked if none of the big three US automakers go bankrupt.  In fact, given the challenges they face, it would seem likely that all three will find their way to bankruptcy court at some point.

We are living in interesting times.


Eugene Krukas, Esq.

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