Judge OKs sale of most Chrysler assets to Fiat
NEW YORK -- A federal bankruptcy judge late Sunday approved the sale of most of Chrysler's assets to Italy's Fiat, moving the American automaker a step closer to its goal of a quick exit from court protection.
Judge Arthur Gonzalez said in his ruling that a speedy sale — the centerpiece of a restructuring plan backed by President Obama's automotive task force — was needed to keep the value of Chrysler from deteriorating and would provide a better return for the company's stakeholders than if it had chosen to liquidate.
"Any material delay would result in substantial costs in several areas, including the amounts required to restart the operations, loss of skilled workers, loss of suppliers and dealers who could be forced to go out of business in the interim, and the erosion of consumer confidence," Gonzalez wrote in his opinion.
"In addition, delay may vitiate several vital agreements negotiated amongst the debtors and various constituents."
As a result, the proposed sale must be approved in order to preserve the value of Chrysler's business and what is ultimately left for its stakeholders, Gonzalez said.
Chrysler has maintained that selling the bulk of its assets to Fiat Group is the only way it can avoid selling itself off piece by piece. If a deal does not close by June 15, the Italian automaker has the option of pulling out.
But three Indiana state pension and constructions funds, which own $42.5 million of Chrysler's $6.9 billion in secured debt, aggressively objected to the sale, saying that it does not provide a big enough return for secured debtholders, while paying off unsecured stakeholders, such as the United Auto Workers union.
The Indiana funds bought their debt in July 2008 for 43 cents on the dollar. Their attorneys have said they would appeal the decision to U.S. District Court if Gonzalez approved the sale.
But it will take a bold and contrarian ruling from U.S. District Court Judge Thomas Griesa to knock Chrysler and Fiat from their path out of Chapter 11 bankruptcy.
