Chrysler takes first steps in bankruptcy court

The judge overseeing Chrysler's bankruptcy approved the first building block of Chrysler's proposed deal with Italian automaker Fiat on Monday by letting the company borrow $4.5 billion from the U.S. and Canadian governments to operate while a deal is worked out.

In addition to allowing the government loans that Chrysler may never pay back, U.S. Bankruptcy Judge Arthur Gonzalez let Chrysler pay hundreds of millions of dollars owed to suppliers and dealers.

The credit line drew objections from a small group of Chrysler debt holders who oppose the Fiat deal. They contended it was too closely tied to the sale.

Corinne Ball, the attorney representing Chrysler, argued that the government loans were the only way Chrysler could survive over the next few days.

"Let us have this lifeline to go forward," she told Gonzalez.

The deal grants the United Auto Workers' trust fund for retiree health care 55% of a new Chrysler-Fiat, a figure worked out by the Obama administration task force and the UAW.

Most of Chrysler's debt holders, carrying $6.9 billion in secured loans, have agreed to take $2 billion in cash for canceling the debt. But the lenders who oppose the deal contend the $2 billion is less than Chrysler would be worth if it were liquidated.

The opposition group includes at least two members, OppenheimerFunds and Stairway Capital. But attorney Thomas Lauria asked to keep the other members shielded from public view, saying some members had received death threats for holding out on the Chrysler deal.

Gonzalez will hear arguments Tuesday over the method by which Chrysler and Fiat plan to conduct their sale in bankruptcy court. The deal can be canceled if the sale isn't closed by June 15, a deadline that can be extended a month for regulatory hurdles.

Meanwhile:

•The CEO of Fiat, which last week agreed to acquire 20% of Chrysler, met with Germany's economy minister in search of government loan guarantees that would let the Italian automaker take control of Opel.

Sergio Marchionne seeks at least some of General Motors' European operations, which includes the Opel and Vauxhall brands. His grand goal is to spin off the carmaking giant, which he said could turn out 5.5 million vehicles a year and thus compete with the globe's biggest and most successful car companies.

•GM announced that it had a number of potential buyers for its Saturn brand and hoped to sell it before the end of the year.

Saturn, which was created in 1984 to compete with Japanese cars for quality and was marketed with a "hassle-free" set price, has slipped in sales. GM said in February it would shut Saturn down if it couldn't be sold.

Contributing: Associated Press

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