Chrysler Heads To Bankruptcy Hearing

Automaker Seeks Judge's OK For Fiat Sale In Face Of Objections By Dealers, Bondholders, Others

(AP)  Chrysler tried to fend off hundreds of objections Wednesday to its plan to sell most of its assets to an Italian automaker, hoping in a marathon court session to save itself from liquidation.

The company was waiting to see whether Judge Arthur Gonzalez of U.S. bankruptcy court would approve the sale. If he does, Chrysler could emerge from bankruptcy within weeks.

The hearing was expected to continue well into Wednesday night, with a decision from the judge perhaps not coming until the wee hours of Thursday morning.

Attorneys for Chrysler say unloading the assets to a group led by Italy's Fiat Group SpA is the company's only hope to avoid selling itself off piece-by-piece. They say a leaner Chrysler could shift more easily to smaller, more fuel-efficient cars.

But many Chrysler dealers, debtholders and former employees say they are being steamrolled by the bankruptcy proceedings. Fiat could back out if the deal doesn't close by June 15.

On the other hand, by emerging so soon from bankruptcy protection, Chrysler would defy skeptics who insisted such a filing would leave the automaker mired in court for many months.

Both Chrysler LLC and General Motors Corp., which now appears almost certain to file for bankruptcy protection, have been hobbled by the health and pension costs of tens of thousands of unionized retirees, in addition to slumping sales.

Bringing Chrysler and Fiat together would dramatically change the face of the country's third-largest automaker. The current plan calls for Fiat to bring a handful of its small cars to the U.S. in the coming years, filling one of Chrysler's biggest product gaps and pleasing a White House intent on making the nation's fleet of automobiles greener.

Chrysler itself entered bankruptcy with a handful of new vehicles in the works. It plans to begin selling an electric car next and have six electric vehicles on the road by 2014.

Even if Chrysler comes out of bankruptcy, its challenges are just beginning. Until the Fiat vehicles arrive, it will have to rely on a product lineup that lost billions of dollars last year.

Even then, there is no guarantee Fiats will sell in this country, where they will compete against small cars from established automakers like Hyundai and Kia.

By Wednesday morning, parts suppliers, dealers and former employees had filed 337 objections to the Chrysler-Fiat deal, although most had been resolved or deferred before the start of Wednesday's hearing.

Some of the strongest opposition to the sale came from lawyers representing a pair of Indiana state pension funds and a state construction fund that own Chrysler bonds.

Tom LaSorda, who served as Chrysler's vice chairman and president before retiring after the automaker went into Chapter 11, was questioned for more than an hour about Chrysler's search for a global partner and how the deal with Fiat came to be reached.

"There was nobody out there that was willing to provide a cash infusion," Lasorda said of Chrysler's search for a partner. "But Fiat brought technology and platforms that were just as valuable or even better."

Early in the hearing, Gonzalez denied a motion by the Indiana state funds' lawyers for more time to prepare for the sale hearing.

The three funds bought Chrysler bonds last year and hold a combined $42.5 million of the company's total $6.9 billion in secured debt.

In the days leading up to its bankruptcy filing, Chrysler reached an agreement with most of its bondholders in which they would receive a combined $2 billion in a deal worth 29 cents on the dollar.

But some bondholders refused to support it, saying that as secured lenders they deserved more.

[whitemale08]

Why isn't Goldman Sucks filing for Chapter 11 right there with them?

Goldman Sucks is INSOLVENT.

Goldman Sucks is exposed to trillions of worthless derivatives and credit-default swaps.

Parasites like Goldman Sucks and JP Morgan are sucking the blood out the taxpayer and it needs to STOP!

[rushlimpdrug]

All this continues to entertain me in a sad way.

Michael Moore's documentary, "Roger & Me" comes to mind.

It was 1989 and the upper krust of America HATED Michael's message
while the middle class ignored it.

So, where can I find a nice used Gremlin?

[sjc_1]

tennisgal44,

You might not be playing so much tennis at the country club if your husband's money for nothing dealership goes under. The working masses shed a tear for you.

[brianbwb-2009]

"But some of the bondholders, including a group represented by Kurtz's firm White & Case, refused to support it, saying that as secured lenders they deserved more."

Suckers bet, suckers lost. Next time, don't gamble with money you cannot afford to lose.

[sjc_1]

"..Indiana state pension funds..."

They had the option of doing what ever they wanted with their money and now they act as if they are entitled to money for nothing with no risk. ...wow.

[brianbwb-2009]

Posted by tennisgal44

You know why your comment is moot? Read the story, GM and Chrysler will be going into bankruptcy, just as many of us predicted years ago. That means all dealerships will close.

The automakers created this problem themselves, it is only the logical outcome when you lay off the core base of their customers, and think that the rich 15% will sustain their business.

So you complain that McSame supporters might have been first to get the axe? Tough noogies, we own the largest group of shares, so what we say goes. Our representatives said close down, so close down. If neo shops close first, oh well, that's the way it goes sometimes, and soon, even the Prog shops will close.

[mitdgreenb]

The President says that SECURED bondholders (i.e., people with a lien on the hard assets) are asking for a taxpayer bailout. Instead, the President has structured a PAYOFF to the UAW for its loyal support for the Democratic Party and his candidacy. Let's hope that the Court serves as a proper check on this abuse of power.

And, Chrysler, by the way, arguing that it's the best deal you can get to avoid liquidation presumes that liquidation is a bad thing. You are a failed company. Liquidation is capitalism's way of recycling your assets.

[tennisgal44]

DID GOP DONATIONS RESULT IN DEALERSHIPS BEING YANKED AWAY?
The decision of which dealers would keep their dealerships and which would lose them appears to have been motivated by the heavy hand of the obama government applying pressure on Chrysler based on some sort of "enemies" hit list. . If a blogger can figure this out, why can't the mainstream media? Oh yeah, they are already completely in the tank for the One.
http://directorblue.blogspot.com/2009/05/red-alert-did-campaign-contributions.html