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Chrysler faces more court hearings to get Fiat deal approved
NEW YORK -- Chrysler on Thursday launched into its second day of testimony in its bid to convince a bankruptcy judge that a deal with Italian automaker Fiat is the best way to save itself from liquidation.
The automaker needs U.S. Judge Arthur Gonzalez to approve the sale despite protests from a group of Indiana state pension and construction funds that hold less than 1% of Chrysler's secured debt. If Gonzalez OKs the sale, the automaker could emerge from bankruptcy protection within weeks.
On Wednesday, Gonzalez heard nine hours of testimony from Chrysler and Fiat Group officials that lasted into the evening. Testimony resumed Thursday morning, with James Chapman, an independent member of Chrysler's board, taking the stand.
Thursday's testimony, which also was to include that of Chrysler CEO Robert Nardelli, was set to be followed by arguments from Chrysler and the various dissenters. Gonzalez said he was prepared to continue the hearing into Friday if needed.
Meanwhile, Chrysler's U.S.-based rival General Motors said Thursday that a committee of its bondholders has agreed to a sweetened deal proposed by the U.S. government to erase of the automaker's unsecured debt in exchange for company stock.
A person familiar with the deal said that it is probable GM will file for bankruptcy protection. The person asked not to be identified by name because discussions are still underway with the U.S. and Canadian governments and there is a small chance that the company could avoid a Chapter 11 filing.
Attorneys for Chrysler say unloading the company's assets to a group led by Fiat is its only hope to avoid selling itself off piece-by-piece. They say a leaner Chrysler could shift more easily to building smaller, more fuel-efficient cars.
But many Chrysler dealers, bondholders and former employees say they are being steamrolled by the exceptionally speedy bankruptcy court proceedings. Fiat could back out if the deal doesn't close by June 15.
Approval of the sale would put Chrysler on track for a quick exit from bankruptcy protection, defying skeptics who insisted such a filing would leave the automaker mired in court for many months.
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