Dodge Nitro Forum banner

1 - 4 of 4 Posts

Super Moderator
23,850 Posts
Discussion Starter #1
Tuesday, May 26, 2009

Chrysler to seek OK for asset sale

Wednesday's hearing crucial to carmaker's exit from bankruptcy

The race through bankruptcy for Chrysler LLC culminates this week with a hearing to sell the company's best assets and prepare it for a fresh start with a new international partner.

On Wednesday, U.S. Bankruptcy Judge Arthur Gonzalez will preside over a hearing to allow crucial Chrysler assets to be sold to predetermined stakeholders as part of a deal to allow for a tie-up with Italian automaker Fiat SpA. Once approved -- as is expected -- most of Chrysler will be out of bankruptcy and become part of the new company, Chrysler Group LLC, which can start building Chrysler, Dodge, Jeep and eventually Fiat vehicles.

It's all part of the Obama administration's plan, which after forcing Chrysler into bankruptcy on April 30, insisted the Fiat-run Chrysler emerge in as little as 30 days. While the company's "good" assets will emerge soon from court protection, its "bad" assets, including some plants, will be left in court, where they will be liquidated to pay off creditors and could fetch only pennies on the dollar.

Already, more than 1,700 documents have been filed with the court, and numerous decisions have been made.
Production to resume

Chrysler has been in shutdown mode for almost a month because it closed all of its plants while in bankruptcy. Soon, the new Chrysler Group will recall its work force and start making cars again, allowing suppliers to ramp up assembly as well and pump a little life back into the industry that has been struggling mightily for months.

That's good news for the company's 2,282 dealers being kept alive after the termination of 789 franchises recently. Consumers no longer will shy away from a company in bankruptcy and, with fewer competitors, the remaining dealerships could become more profitable.

"Chrysler has been in a state of flux, and the faster it gets a defined path and a portfolio of vehicles, the better," said Michael Robinet, vice president of global vehicle forecasts with CSM Worldwide in Northville.

But it all hinges on the outcome of a hearing that starts at 10 a.m. Wednesday in New York when Gonzalez hears a motion to sell the company's good assets.

"In the next few days, we will take important steps to fulfill our plan to create a vibrant new car company," said Chrysler spokeswoman Lori McTavish.

If the sale is not consummated, the automaker says in court filings that it lacks the "financing and liquidity to reopen and restart" its business to produce 2010 model vehicles.

There is a sense of urgency.

"It is absolutely vital they get it done, and it must be done in a timely manner," Robinet said.

There will be no auction as is normally the case in bankruptcy court; the only bidder for the assets is the Chrysler Group, whose shareholders include Fiat, the U.S. Treasury, Canadian governments and a union-run health care trust fund.

But there will be objections.

During the Wednesday hearing, Gonzalez will hear from parties protesting the sale. Many are rejected dealers seeking a delay or compensation for their unsold vehicles and parts. Others include those with product liability and asbestos claims against Chrysler.

A vocal opponent is a group of Indiana state pension and construction funds. They are secured creditors of the bankrupt Chrysler arguing their claims should take precedence over some others. This group was not successful in an earlier motion before Gonzalez to delay the sale, but it has a hearing today in district court to again try and stop the sale. If unsuccessful, the group is expected to be back in front of Gonzalez on Wednesday to plead its case again.

Some suppliers also are opposed to and dispute Chrysler's figures on how much they were owed before the bankruptcy hearing.

Thomas Spillane of Foley & Lardner LLP in Detroit, who represents a number of suppliers, said the goal is to resolve the issues before the hearing.
Leadership in place

The new company is ready to go. Last week, the government appointed industrialist C. Robert Kidder to be its chairman. Fiat has appointed CEO Sergio Marchionne to act as CEO of the new Chrysler, and the Italian automaker has also appointed two others to the nine-man board.

In a letter to employees Friday, outgoing Chairman Robert Nardelli said, "It's critical that our suppliers be ready to go once the new company completes its purchase of assets."

Nardelli said the automaker has adequate debtor-in-possession financing and a court-authorized process to transfer 1,200 suppliers to the new company, and some companies have already mailed back signed contracts "paving the way for the resumption of production and the normalization of operations."

Those involved with the case say Gonzalez has been a fair judge and will ensure that everyone has a say while ensuring the proceedings move at a good clip as the White House has requested.

Approval of a sale traditionally has a 10-day appeal window before the transaction closes, but it can be shortened or waived, said Bob Gordon, head of the bankruptcy practice of Clark Hill PLC in Birmingham.

"It is unusual to move this quickly," said Gordon of the entire procedure, adding this has been an unusual case from the outset.

Getting Chrysler Group on its feet quickly, with $6 billion in loans, would be encouraging for General Motors Corp. as it prepares to file for Chapter 11 by June 1.

The U.S. Treasury pledged $4.1 billion in debtor-in-possession funding for up to 60 days to allow Chrysler to complete its restructuring within Chapter 11. On Thursday, Gonzalez approved $4.96 billion in funds from the U.S. and Canadian governments, with some of the additional money to cover any losses from GMAC LLC, which is taking over auto financing for Chrysler from Chrysler Financial.

"Chrysler will be positioned for long-term success when it emerges from this restructuring process," Nardelli said.

LINK:Chrysler to seek OK for asset sale | | The Detroit News

Super Moderator
23,850 Posts
Discussion Starter #2
Federal court expected to OK

Federal court expected to OK Chrysler asset sale to Fiat

6:51 PM EDT, May 26, 2009

Struggling Chrysler Llc is expected to get another fresh start as early as Wednesday when a federal bankruptcy court judge approves the sale of its best assets to Italy's Fiat, the U.S. and Canadian governments and the United Auto Workers.

Local dealers say they hope the end result will be stability and new and more fuel-efficient cars and trucks to better position them for a world of rising gasoline prices and government mandates for higher miles per gallon. "My hopes are the new models we're going to get and that we get some stability while we're waiting for those cars to come," said longtime Chrysler dealer Richard Mullen Jr. of Mullen Motors in Southold.

Analysts say the asset sale and reorganization under Chapter 11 of the U.S. Bankruptcy Code will produce a leaner company with costs that are more in line with its reduced sales and market share.

But auto expert Steven Spivey, who is based in San Antonio for the consulting firm Frost and Sullivan, predicts that the next two years or so will be touch and go for Chrysler, with continued financial losses as it waits for the depressed U.S. new vehicle market to recover and the first new models from Fiat to arrive at dealerships.

At Smith Haven Dodge and Jeep in St. James, owner Brett Saslow says dealers expect six new vehicles from Fiat. "The Fiat thing fits like a glove because it fills all the gaps as far as giving us the smaller vehicles we don't have in our lineup."

Spivey says regaining sales and market share will be more difficult with the planned cancellation effective June 9 by Chrysler of franchise agreements with 789 of its dealers, about a quarter of the total and including four of the 20 on Long Island. Chrysler has argued that its sales were too low for all of its dealers to prosper. "They're making the products harder to find and harder to get to," said Spivey. "I don't think the short term outlook is real positive there."

Many of the dealers being axed agree and about a dozen of them made their case Tuesday at a rally in front of the Jacob Javits Convention Center, said attorney Leonard Bellavia of Mineola, who represents them.

Bellavia says he'll be in U.S. Bankruptcy Court in Manhattan to argue before Judge Arthur Gonzalez that the plan for the asset sale to create a new Chrysler Corp. is flawed because it includes elimination of dealers who have provided Chrysler with 14 to 16 percent of its revenues. "The notion that Chrysler can undertake the risk of going forward losing 14 to 16 percent of their revenue has no business justification," said Bellavia.

GM, Ford and Chrysler have been the hardest hit of all carmakers by a recession that pared U.S. auto sales to an annualized rate of under 10 million cars and trucks - down from 13 million last year and more than 16 million in years just prior. Ford hasn't sought federal aid, however.

Chrysler, which was saved from insolvency 29 years ago by federally backed loans, filed for bankruptcy April 30 and it now appears that General Motors will follow by Friday.

Article Link: Federal court expected to OK Chrysler asset sale to Fiat --

Super Moderator
23,850 Posts
Discussion Starter #3
Employee Letter 05/27/09

Nardelli updates employees on final stages of alliance restructuring

Posted Wednesday, May 27, 2009, 2:02 pm

Dear Employees,

We’re now in the final stages of our effort to complete our alliance with Fiat and create a vibrant new car company. In line with our commitment to keep you informed of important news, here are the latest developments.

Over the past three days, some of our executives provided court depositions in response to objections filed to our plans to emerge from Chapter 11 bankruptcy. We are pleased that the U.S. District Judge declined a motion by the Indiana state pension funds on Tuesday to stay the hearing on the sale of substantially all of Chrysler LLC’s assets to a new company, Chrysler Group LLC, that we are forming in partnership with Fiat. The judge refused to move our case from U.S. Bankruptcy Court to the District Court, allowing the sale hearing to proceed as planned.

This hearing on the sale and the creation of our new company began today in the U.S Bankruptcy Court for the Southern District of New York. This is the key and final step prior to formation of our new company. With the support of the U.S. and Canadian governments, the UAW and CAW, our suppliers and dealers, this new company will be well-positioned to move forward as a strong, financially sound automotive company serving our customers with a broader and more competitive lineup of environmentally friendly, fuel-efficient, high-quality vehicles.

We will be represented in court today by senior Chrysler officers, as well as by our legal counsel and financial advisors. As is normal in proceedings of this type, there will be an opportunity for anyone objecting to the transaction to be heard in court. Supporters of the transaction, including representatives of the U.S. Treasury, the Canadian government, Fiat, the UAW, our suppliers, dealers and various creditor groups also will be heard.

Following the conclusion of the hearing, the judge will issue an opinion. Sometimes this opinion is presented orally after a short recess; sometimes the judge will take a little more time before ruling. We are hopeful for a positive outcome. Under the rules that govern this type of bankruptcy, if the judge approves the transaction, he will allow a brief period for anyone opposing the deal to file an appeal. We look forward to continuing this process, with the goal of moving toward a closing.

When there are results to report on the sale hearing, we will continue to provide you updates as soon as possible. Thank you for your continued support as we look forward to a new beginning and future success.


Super Moderator
23,850 Posts
Discussion Starter #4
Chrysler hearing adjourned

May 27 2009 8:53PM

Chrysler hearing adjourned

NEW YORK (AP) A bankruptcy court judge in New York has adjourned a hearing on Chrysler's plan to sell most of its assets to Fiat. The hearing will continue tomorrow after nine hours of testimony today. Chrysler wants the judge to approve the sale over objections from pension and construction funds that hold less than one percent of Chrysler's secured debt.
1 - 4 of 4 Posts