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Chrysler assets to be sold to Fiat
By Emily Chasan |
June 2, 2009, Tuesday
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Print Edition
Print Edition
A UNITED States bankruptcy judge on Sunday approved the sale of substantially all of US auto maker Chrysler's assets to a group led by Italy's Fiat SpA hours before General Motors Corp's bankruptcy filing.
Judge Arthur Gonzalez approved the US$2 billion sale of the assets to a new company that will be 68 percent controlled by a health care trust aligned with the United Auto Workers union.
Fiat will control 20 percent, the US and Canadian governments will control the other 12 percent.
In his written opinion, Gonzalez said the only alternative to approving the sale was the "immediate liquidation" of the company and that he was concerned about saving the value of Chrysler as a continuing operation.
"Indeed, because of the overriding concern of the US 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 wrote in a 47-page opinion.
Chrysler filed for bankruptcy protection on April 30 to complete the sale and alliance with Fiat within 60 days in a case that analysts have seen as a test for the much bigger and more complex bankruptcy of GM.
Gonzalez, who has also overseen the Enron and WorldCom bankruptcies in his nearly 14 years on the bench, rejected nearly every argument objectors to the deal offered up in a three-day hearing last week.
He also questioned some of the objectors' legal rights to make such arguments.
Objectors had included a group of Indiana pension funds holding secured debt, some of the 789 dealerships Chrysler plans to discontinue, and consumer groups.
They had argued that Chrysler was moving too quickly, that the sale violated bankruptcy principals and that the firm was needlessly closing hundreds of its dealerships.
Lawyers for the firm said the quick sale was needed to preserve the value of Chrysler's operations and save more than 100,000 auto-related jobs.
Gonzalez did not accept arguments by dealers that the new Chrysler was unfairly rejecting their dealership franchises. He noted another hearing on dealer contracts is set for tomorrow.
Judge Arthur Gonzalez approved the US$2 billion sale of the assets to a new company that will be 68 percent controlled by a health care trust aligned with the United Auto Workers union.
Fiat will control 20 percent, the US and Canadian governments will control the other 12 percent.
In his written opinion, Gonzalez said the only alternative to approving the sale was the "immediate liquidation" of the company and that he was concerned about saving the value of Chrysler as a continuing operation.
"Indeed, because of the overriding concern of the US 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 wrote in a 47-page opinion.
Chrysler filed for bankruptcy protection on April 30 to complete the sale and alliance with Fiat within 60 days in a case that analysts have seen as a test for the much bigger and more complex bankruptcy of GM.
Gonzalez, who has also overseen the Enron and WorldCom bankruptcies in his nearly 14 years on the bench, rejected nearly every argument objectors to the deal offered up in a three-day hearing last week.
He also questioned some of the objectors' legal rights to make such arguments.
Objectors had included a group of Indiana pension funds holding secured debt, some of the 789 dealerships Chrysler plans to discontinue, and consumer groups.
They had argued that Chrysler was moving too quickly, that the sale violated bankruptcy principals and that the firm was needlessly closing hundreds of its dealerships.
Lawyers for the firm said the quick sale was needed to preserve the value of Chrysler's operations and save more than 100,000 auto-related jobs.
Gonzalez did not accept arguments by dealers that the new Chrysler was unfairly rejecting their dealership franchises. He noted another hearing on dealer contracts is set for tomorrow.
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