Chrysler could be on its way out of bankruptcy after declaring Chapter 11 less than 30 days ago. The automaker could soon clear its last major hurdle if a judge overrules more than 340 objections to approve itssale to agroup that includes Fiat.
Italy's Fiat S.p.A., labor organizations, and the U.S. and Canadian governments would purchase Chrysler's stronger operations to form a "New Chrysler." If the sale were to go through, it would meet the White House's goal of restructuring the company in 30 to 60 days.
In exchange, the company's lenders would receive $2 billion. Yet the sale is opposed by the nearly 800 Chrysler dealers that are scheduled to close, along as well as debt-holders, retirees, and suppliers.
A quick sale is important to preserve the value of Chrysler's operations, save more than 100,000 auto-related jobs, and prevent further economic shock in the Midwest. It would also free the company of $6.9 billion in loans and retiree benefits.
Earlier this week a U.S. federal judge denied a request by a group of Indiana pension funds that wanted to delay the hearing on Chrysler's sale and move the bankruptcy case to district court. The funds had argued the government exceeded its authority in the case.
Richard Hahn, co-chair of Debevoise & Plimpton LLP's Bankruptcy & Restructuring Group, said, "The government has behaved very much like any other principal who was investing money in a troubled situation for the purposes of promoting a debtor's reorganization and obtaining control of the entity." He also said, "Of the objections I've heard of, none will stop the entry of the (sale) order tomorrow."
Source: Automotive News