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Chrysler bankruptcy: speed is of the essence

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According to senior officials at the White House, the bankruptcy will be over within 30 to 60 days. Then, the government will provide $4 billion so the company can exit bankruptcy.

But some outside experts think the White House is overly optimistic about how fast it can get the troubled company out of bankruptcy.

“I would be shocked if the bankruptcy judge can manage a bankruptcy as complicated as this one, with as much money involved and interested parties, in 30 to 60 days,” says S. David Cohen, a professor at Pace Law School in White Plains, N.Y. “Maybe more like 18 months.”

It’s important to get the company in and out of bankruptcy fast, analysts say, to avoid damaging Chrysler's own prospects and the fragile economy.

“If they get it done quickly, then there will be a relatively minimal impact on the economy,” says Joel Naroff of Naroff Economic Advisors in Holland, Pa. “The suppliers won’t panic; the companies that do business with them won’t panic. But the longer it goes, the bigger the impact on all the suppliers, and the problems are a lot greater.”

One potential problem ahead could involve the dealer network. Senior officials at the White House, in a background briefing Thursday morning, indicated they expect Chrysler to reduce the number of dealers over time. The bankruptcy filing allows the company to do this despite some state franchise laws. Later on Thursday, this prompted a warning from John McEleney, chairman of the National Automobile Dealers Association.

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