Chrysler bankruptcy: Argument for quick deal with Fiat

NEW YORK -- Chrysler's attorneys will make the key argument in the company's historic bankruptcy case Monday, contending that a sale of the company to a new partnership with Fiat in a matter of days is the only path for survival.

In motions filed Sunday, the automaker laid out plans for completing the complex deal in 60 days or less, warning that several key parts of the transaction would fall apart — including U.S. and Canadian government backing to keep Chrysler alive during bankruptcy — if there's any delay.

Under the deal, Fiat will get 20% of Chrysler, along with the right to boost its stake to 51% once it pays back all government loans. The UAW retiree health care trust fund will own 55%, and the U.S. and Canadian governments will hold the remainder.

Chrysler will use a $4.5 billion loan from the two governments to survive bankruptcy. With all its plants shuttered as of Monday and no incoming revenue, the company still has to pay key suppliers and dealer sales incentives.

"Even with the help of the U.S. and Canadian governments, the Debtors (Chrysler) can sustain that support for only a short period of time," Chrysler's attorneys said in the filing. "When that period expires, so does Chrysler."

Once it emerges, Chrysler will get an additional $6 billion in loans from the two governments.

Chrysler will ask U.S. Bankruptcy Judge Arthur Gonzalez on Monday to approve a motion setting out the method for selling most of the company's assets to a Chrysler-Fiat venture.

Known as a Section 363 sale, the deal will see most of Chrysler's assets — excluding eight U.S. plants and some liabilities — transferred to the new company in return for $2 billion to pay some of the old company's liabilities.

With the U.S. and Canadian governments acting as the only source of cash for the deal, Chrysler argues that the judge could begin hearing arguments to confirm the sale by May 21.

In addition to the short window of government backing, other parts of the deal require quick action by the bankruptcy court. The sale agreement between Fiat and Chrysler can be canceled if the deal isn't closed by June 15, a deadline that can be extended a month for regulatory hurdles.