U.S. bankruptcy judge Arthur Gonzalez approved Chrysler’s plan to sell its assets to a new entity controlled partially by Fiat and partially by the U.S. and Canadian governments on Sunday. The new entity, which will purchase the assets for $2 billion, will be majority owned by a healthcare trust fund controlled by the United Auto Workers union.
In his written opinion, Gonzalez said the only alternative to the sale was liquidation for the automaker. He cited concerns over saving the value of Chrysler as a continuing operation for his quick decision on the transaction.
“Indeed, because of the overriding concern of the U.S. and Canadian governments to protect the public interest, the terms of the Fiat Transaction present an opportunity that the marketplace alone could not offer, and that certainly exceeds the liquidation value,” Gonzalez said.
Although the sale is expected to close on June 15, it could still be stopped by a group of lawyers representing Indiana pension funds. Judge Gonzalez already ruled against the lawyers’ objections, but a U.S. District Court judge could still rule in their favor and delay the sale, though such a ruling is unlikely.
The fate of Chrysler’s axed dealers is still undecided. Gonzalez will give the dealers another hearing on June 4, though he already ruled that Chrysler’s decision to cut the dealers was well within the bounds of bankruptcy.
“The hard-fought ‘take it or leave it’ approach that often drives the outcome of this type of negotiation is troubling to some, but such is the harsh reality of the marketplace,” Gonzalez said.