Chrysler-Fiat nears reality
Indiana pension fund's objections are put aside by appeals court. Troubled automaker moves closer to deal with Italian company.
Last Updated: June 5, 2009: 5:03 PM ET
NEW YORK An appeals court Friday upheld Chrysler LLC's plan to exit bankruptcy.
The new company will be owned jointly by the U.S. government, an autoworker's union retiree fund and the Italian Automaker Fiat.
The deal will go through on Monday afternoon unless the Supreme Court intervenes, Chrysler attorney Corinne Ball told CNN.
Indiana Treasurer Richard Mourdock had appealed the ruling of a federal bankruptcy court on May 31 allowing Chrysler to sell its best-performing assets, including factories and dealerships, to a new company called the Chrysler Group.
Mourdock made his appeal was on behalf of three pension funds -- for Indiana teachers and state police, as well as a "Major Moves" construction fund. The funds hold about $42 million, or less than 1%, of Chrysler's $6.9 billion debt.
The automaker has been trying to leave behind its debt as part of the Chapter 11 process, which would wipe out part of the pension fund's holdings. It filed for Chapter 11 on April 30.
The Chrysler Group would be comprised by several major stakeholders. The biggest share, of 55%, would be controlled by a United Auto Workers union trust. The Italian automaker Fiat would own 20% initially, though this share could eventually increase. A minority stake of 8% would go to the U.S. government, and 2% would be held by the federal and provincial governments of Canada and Ontario.
Mourdock said the pension funds are secured creditors and therefore they deserve a place at the table. White & Case, the prominent law firm representing his appeal, is arguing that the bankruptcy court ignored various legal points in approving the asset sale.
Chrysler's asset sale was approved just hours before bankruptcy filing of General Motors (GMGMQ) on June 1.
Article Link:Chrysler wins appeals court ruling paving way for Fiat deal - Jun. 5, 2009
The Big Three automakers have been hammered in the last of couple years by rising fuel prices, the drying-up of bank loans to customers, and a recession that has severely hampered consumer spending. To top of page