Chrysler has hired a prominent law firm, called Jones Day, as bankruptcy counsel to help the automaker prepare for a possible Chapter 11 bankruptcy filing should its efforts to persuade Congress for help fail, according to the Wall Street Journal.
A Cerberus spokesman declined comment for this report.Chrysler said it hired the firm to help evaluate whether there were better options than getting a bridge loan from the government, which it has maintained is the best option.Nardelli has said Chrysler could go straight into liquidation if it fails to win the $7 billion it needs to stay afloat.Chrysler also is asking for as much as $8.5 billion in loans from the U.S. Energy Department to help build more fuel efficient vehicles. On Friday, Nardelli also said Chrysler's financial arm needs about $4 billion to $5 billion so it can make loans.On Friday, under intense questioning about why Cerberus is not injecting its own funds into Chrysler, Nardelli responded that Cerberus is made up of many investors, such as pension and other funds, and he cautioned that Cerberus is unable "to commit, on the behalf of those investors, to put more" money into Chrysler.Nardelli said he has asked Cerberus for more money."We've asked them," he said. "We've asked every major financial institution. All hundred of those that got TARP (Troubled Asset Relief Program) funding, we've asked for funding. We've gone offshore asking for funding."
U.S. Rep. Paul Kanjorski, D-Pa., joined in on the questioning of why Chrysler should be helped."A masterful obfuscation," Kanjorski said to Nardelli.Kanjorski engaged in a testy exchange with Nardelli, asking if the issue was that Cerberus did not believe the U.S. auto industry is "survivable in its present form."Nardelli: "Sir, they've never conveyed that to me."Kanjorski: "Well, then why won't they give you any money?"Nardelli: "I ... I assume they have no access to additional funds."