Chrysler Seeks Chapter 11 Reorganization

The impact on Sirius XM is to be determined
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After Chrysler filed for Chapter 11 reorganization Thursday, it's unclear what happens with its relationship with Sirius XM.

Sirius is offered as either standard or an in-dash factory option with a free one-year subscription in several new Chrysler models: the 300 Series, Aspen, Pacifica, PT Cruiser, Sebring and Town & Country. Sirius Traffic and Sirius Backseat TV are also offered in some Chrysler vehicles.

Chrysler said it couldn't get the necessary concessions from all of its lenders to avoid a bankruptcy proceeding. As a result, under the direction of the U.S. Treasury, Chrysler LLC and 24 of its U.S. subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the federal bankruptcy court for the Southern District of New York.

It said that, as a result of a restructuring plan agreed to by many of its stakeholders, it has reached an agreement in principle to establish an alliance with Italian automaker Fiat to form a new company. The two companies want to share manufacturing "footprints" and a global supplier base, while giving each access to additional markets.

In return, the federal government, which has given billions of dollars to Chrysler, agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.

The company plans to ask the bankruptcy court for swift approval of the Fiat deal and the sale of its principal assets to the new company, saying this should help "a leaner new company" to emerge within 60 days.

When the Fiat transaction is completed, the Voluntary Employee Beneficiary Association, a health-care trust fund for Chrysler retirees, will own 55 percent and the U.S. and Canadian governments will own proportionate shares of a 10 percent stake. Fiat initially will hold a 20 percent ownership stake in Chrysler with the right to increase its stake an additional 15 percent in three increments as it meets certain criteria. Fiat cannot become a majority owner until after U.S. government loans have been repaid.

As a part of the restructuring, most Chrysler manufacturing operations will be temporarily idled effective Monday. Production schedules would resume when the transaction is completed, which parties anticipate will be within 30 to 60 days, they said.

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