Chrysler can pay workers, business expenses, judge rules
DETROIT -- Chrysler can keep paying its employees and contract workers pre-bankruptcy wages, benefits and business expenses, a Bankruptcy Court judge said Friday.
Attorneys packed the courtroom Friday morning for Chrysler's first hearing that may signal whether a quick, "surgical" bankruptcy will be possible for the automaker.
The third-largest U.S. automaker filed for bankruptcy protection Thursday with an ambitious plan to emerge in as little as 30 days as a leaner company.
Chrysler idled its manufacturing plants Friday, its lawyer Corinne Ball said during the company's first court hearing.
Chrysler had said Thursday it will close all of its plants starting Monday and they will remain closed until the company comes out of bankruptcy. At least three Detroit-area factories sent workers home Thursday after suppliers stopped shipping parts over fears they would not be paid.
The company is aware that experts believe that a car company cannot survive bankruptcy, but Chrysler can, and must, Ball said.
"We need to keep driving forward. We need to protect our core value and we need to keep safe our customers," Ball, who works for the law firm Jones Day, said.
In the early morning hours before the hearing began, attorneys lined up outside the bankruptcy court for the Southern District of New York under overcast skies with coffee and rain gear in tow of hopes of securing a spot.
The large, windowless courtroom filed up quickly and two overflow rooms with video and audio feeds were opened up to accommodate the crowds.
The hearing was briefly halted after a woman standing in the warm and stuffy courtroom apparently fainted.
Eventually, Judge Arthur Gonzalez will have to reach a decision on creditors that hold $6.9 billion of Auburn Hills, Michigan-based Chrysler's debt. Banks holding 70% of the debt agreed this week to a deal, but some hedge funds balked, saying it was unfair.
After months on government life support, Chrysler is pinning its future on plans to build cleaner cars through an alliance with Italian automaker Fiat. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.
