Before they landed in bankruptcy court the sides where free to negotiate what ever they wanted. When the matter landed in Bankruptcy court, Chrysler tried it's pre-filing negotiating position as an opening court position. If the bankruptcy court forces something on Chrysler, it is sure to not follow this suggested deal. Both sides know that well, it probably isn't even legal as court ordered settlement.

The creditors are still breaking down and accepting the deal. Basically, Obama is refusing to roll over and give the creditors more then they could get for liquidation. Think of Chrysler as a guy who owes $500 and has $100 in assets. In a straight liquidation, the assets are sold the creditors get $1 for every $5 they are owed. What is happening here is that the government doesn't want to see they guy get liquidated, so the government is offering the creditors $100 and offering the guy a new $200 loan to get back on his feet. What the creditors are saying is, "Hey, there is $200 there we should be getting." The governments reply is "Fine, we cancel the loan offer, and we are going to tell everybody you ruined this guy."

Jay