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Chrysler's Bankruptcy Clouds Future for Chrysler Financial

While Chrysler LLC's bankruptcy filing under Chapter 11 on Thursday provided a clearer picture of the troubled automaker's way forward, it left the future of Chrysler Financial clouded.

by Staff
May 1, 2009
2 min to read


While Chrysler LLC’s bankruptcy filing under Chapter 11 on Thursday provided a clearer picture of the troubled automaker’s way forward, it left the future of Chrysler Financial clouded.

In a letter sent out Thursday, the finance company informed dealers that Chrysler’s bankruptcy filing could jeopardize agreements with its lenders.

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“As a separate entity, Chrysler Financial is not included in the CLLC filing,” read the letter. “However, it does present several operational challenges that Chrysler Financial must address in order to maintain our credit agreements with our lenders.”

Until new procedures and process with its lenders are implemented, Chrysler Financial immediately suspended all incremental wholesale funding, all dealer loan advances in electronic fund transfers (ELT), all cash management accounts (CMA) re-advances, all new Dealer Rent-a-Car (DRAC) program funding, and fleet wholesale and fleet lease contract funding.

Additionally, Chrysler Financial suspended participation in Chrysler LLC’s subvented annual percentage rate program. The letter also stated that going forward, credit approvals will only be applicable for standard rate contracts.

“We now require that a contract be fully discounted prior to funding,” the letter read. “These proceeds will be credited toward the wholesale floorplan obligation that may exist on that specific unit at the time of processing. You will have 30 days from the date of approval to fund these contracts.”

As for retail financing, dealers will still be able to offer retail financing to customers at standard rates through Chrysler Financial. Dealers will also still be able to process applications through RouteOne.

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Dealers were also notified that Chrysler Financial’s point-of-sale systems – CF Connect, eContracting, AutoOrigination, and ACE – will remain available. The company’s Dealer Rewards and CF Achievement will also remain available to dealers, as well as its Rewards Visa Instant Credit Card.

The letter also offered a 30-question Q-and-A section, and directed dealers with questions about their franchise agreements to Chrysler LLC. It also directed dealers to Chrysler Financial’s CF Connect dealer portal for additional updates on the finance company’s progress to rectify agreements with its lenders.

“Chrysler Financial remains focused on our operations,” read the letter. “We will provide updates as events unfold and as new processes that affect our current products and services are established and implemented.”

Topics:F&I

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