Judge OKs Chrysler's steps toward sale to Fiat

NEW YORK -- The judge overseeing Chrysler's Chapter 11 proceedings has ruled that the automaker can start taking steps toward selling the vast majority of its assets to Italy's Fiat Group.

The judge also said lawyers for a dissident group of lenders have until noon Wednesday to file a list of members with the court, ruling that their identities do not need to be sealed despite reported death threats.

After more than seven hours of testimony and legal arguments, Judge Arthur Gonzales approved the bidding procedures for the proposed sale late Tuesday, saying they represented a "clear and orderly process."

Bids for all or part of Chrysler's assets must be submitted by May 20, and a determination of the lead bid made by May 26. A final sale hearing would be held on May 27 and the sale could close in as little as 30 days after that.

If a sale to Fiat fails to go through, Chrysler will pay the automaker a breakup fee of $35 million.

Lawyers on Tuesday packed the hot and stuffy New York City courtroom for a third-straight business day of testimony in the case, which the automaker hopes will end in a swift exit from court oversight. Attorneys for Auburn Hills, Mich.-based Chrysler argued that the automaker had essentially been up for sale for most of the last two years and that a speedy sale was needed in order to preserve the value of the company's assets.

In addition, it's indisputable that the automaker cannot survive without government financing that would not be provided without some kind of partnership with another automaker, Chrysler attorney Corinne Ball said.

"It's uncontroverted that time is not our friend here," Ball told the court. "The preservation of value demands that we move forward."

Ball pointed to cases such as Lehman Brothers, Bear Stearns and Wachovia as examples of how quick sales at distressed companies can be successful.

Asset sales at companies operating under bankruptcy protection usually are accomplished through auctions, though there generally is a lead bidder, which in this case would be Fiat. The idea is to make sure that the company, and its lenders, get the most that they can for the assets.