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Chrysler hearings over Fiat sale enter second day



Thursday May 28 2009

* Sale hearing continues; Chrysler CEO to testify
* Judge expected to overrule hundreds of objections
* Opponents planning appeals


NEW YORK, May 28

Chrysler will return to bankruptcy court on Thursday for the likely approval of the sale of most of its operations to a group that includes Fiat, although hundreds of objections were still scheduled to be heard.

The automaker seeks approval to sell its stronger operations to a "New Chrysler" owned by Italy's Fiat, labor unions and the U.S. and Canadian governments, in exchange for $2 billion paid to lenders.

Approval would be a victory for the White House, which many bankruptcy specialists had criticized as unrealistic when it set a 30- to 60-day schedule for bringing the automaker's operations through Chapter 11.
A line formed outside the court three hours before the start of Thursday's hearings, which will feature testimony from Chrysler Chief Executive Robert Nardelli, as well as the company's executive in charge of managing relations with dealerships.

Ten hours of hearings on Wednesday centered on cross-examining Chrysler's former President and Vice Chairman, Tom Lasorda and its financial adviser as well as the Fiat executive for the company's powertrain business.

Opponents to the sale focused Wednesday's questions on last-minute negotiations to avoid bankruptcy, the role of the U.S. government and strategic thinking about dealerships.

Participants in the hearings said the length of the testimony and nature of the questioning suggested both the judge and sale opponents were looking ahead to possible appeals.

Lawyers opposing the sale said on the sidelines of Wednesday's hearings that they expected the judge to approve the Fiat deal, and that they expected immediate appeals.
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 case has blitzed through court, largely thanks to government financing of the bankruptcy and a willing buyer in Fiat. To preserve cash, Chrysler shut its operations when it filed for bankruptcy, which added to the urgency of the case.
The automaker argued a quick sale was critical to preserve the value of its operations, save more than 100,000 auto-related jobs and prevent further economic shock waves.

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 gain technology needed to diversify a product line now heavily weighted toward trucks and SUVs.

The case is In re Chrysler LLC, US Bankruptcy Court, Southern District of New York, No. 09-50002.

Article LINK:Business Feed Article | Business | guardian.co.uk
 
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