Chrysler looks set to clear its last major hurdle in its sprint through bankruptcy court as soon as Thursday, when a judge is expected to overrule more than 340 objections and approve its sale to a group that includes Fiat.
Less than 30 days after it filed for bankruptcy, the automaker seeks approval to sell its stronger operations to a “New Chrysler” owned by Italy's Fiat, labor and the U.S. and Canadian governments, in exchange for $2 billion paid to its lenders.
Those opposing the sale include the nearly 800 dealers Chrysler wants to shutter, as well as debtholders and retirees. Suppliers, which are owed more than $5 billion, have also objected.
The sale will complete the White House's goal of reorganizing the automaker in 30 to 60 days, largely thanks to government financing of the bankruptcy and Fiat's role as a buyer. Chrysler shut its operations when it filed for bankruptcy, which lent weight to the argument that the sale needed to be approved quickly.
Chrysler argued the quick sale was critical to preserve the value of its operations, save more than 100,000 auto-related jobs and prevent economic shock waves from sweeping across the Midwest, which is already mired in a deep recession.
The sale would free the automaker of $6.9 billion in loans and cumbersome retiree benefits that it blamed for its struggles against more nimble competitors. By teaming up with Fiat, Chrysler could expand beyond the U.S. market and diversify a product line now heavily weighted toward trucks and SUVs.
The government provided more than $8 billion in emergency loans to Chrysler before the bankruptcy and nearly $5 billion financing to carry it through the Chapter 11 reorganization, which has proven contentious.
The opponents of the sale may still appeal if it is approved, although there is a risk the sale may close during the appeal process.
“Of the objections I've heard of, none will stop the entry of the (sale) order,” said Richard Hahn, a bankruptcy attorney with Debevoise & Plimpton LLC in New York. “It all sounds sort of like the background noise.” (Reuters)