Commentary: Chrysler...A Tale of Failed Relations

It's old news now, but on April 30, Chrysler LLC filed for Chapter 11 bankruptcy. This allows the once venerable automaker to shed assets, restructure debt, cancel contracts and close operations.

Chapter 11 differs from a Chapter 7 bankruptcy in that it staves off liquidation. Once financing is secured, the company can emerge from bankruptcy as a new legal entity. It is this new entity that, as Star Trek's Spock would say, is fascinating.

The U.S. government says the Chrysler needs only 30 to 60 days to re-emerge. Keep in though mind that United Airlines spent more than 3 years in bankruptcy protection, and Delphi has been in Chapter 11 since 2005.

When the new Chrysler emerges from its cocoon, its metamorphosis will see Italian car maker Fiat managing the new company with most of the assets from Chrysler-of-old.

We know a cat has nine lives. Moths go through the same transformation as butterflies, but aren't as pretty. I believe though, they have a purpose in the greater scheme of things. Perhaps that's why Chrysler's still around.

The reason for the rebirth, reincarnation and resurrection analogy? Well, it's just because we've been down this road before with Chrysler — in 1979, the U.S. government bailed out the Detroit automaker to the tune of $1.5 billion.

In fact, Chrysler's history is begins with restructuring. Walter Chrysler founded the company in 1925 after re-organizing the Maxwell Motor Company. Forty years later, Chrysler expanded its footprint into Europe and picked up majority stakes in Britain's Rootes Group, Simca of France and Barreiros of Spain to form Chrysler Europe.

And that's when things started to get messy.

The European assets proved too troublesome for Chrysler and they were sold to PSA Peugeot Citroen, which were in turn passed on to Renault. By the 70s, Chrysler Europe had essentially collapsed and to become a footnote in the company's history.

It weren't always this dire at Chrysler. It had its moments of glory. In 1987, it acquired Lamborghini. And eleven years later, Daimler-Benz purchased Chrysler, giving it upper-echelon status by association with Mercedes.

But Chrysler sold Lamborghini in 1994 and the Daimler marriage proved barren. In 2006, Daimler in turn, sold 80 percent of its stake in Chrysler to private equity firm Cerberus.

Is Fiat Chrysler's True Soulmate?

Getty Images Sergio Marchionne

The Detroit automaker's many tie-ups, alliances, acquisitions and mergers, reads like Elizabeth Taylor's love life. But desperate to find a co-joined future, Chrysler today is giving marriage another go with Fiat.

The Italian automaker itself, has a colorful history. It has in its stables, small cars to sport cars made by Ferrari, to vans and trucks from Iveco. And it can sympathize with Chrysler. Just as recent as 4 years ago, Fiat was bogged down with losses and looked to be in serious trouble.

So serious was the situation, that General Motors paid $2 billion to disassociate themselves with Fiat, rather than face being called to exercise a put option to acquire a stake in the company.

The Agnelli family seems to have gotten it right when they picked an accountant Sergio Marchionne in 2004, to turn around the fortunes at Fiat. In just two short years, Marchionne has made Fiat profitable again.

Can Chrysler Live Long And Prosper?

What does Fiat bring to Chrysler? From all accounts, absolutely nothing. Marchionne has already said he's not throwing good money after any current Chrysler model. The Italian carmaker is keen on getting into the North American market where it's had limited success. Ferraris and Maseratis need no introduction, however its smaller fuel efficient cars will now be accessible to the U.S. market, giving Americans another option besides Toyota's Prius and Honda's Insight.

Why is Fiat confident that it can succeed where Daimler had failed? Would expansion so soon after emerging from its own troubles be the right strategy? And would Fiat be better off focusing on strengthening its product line in key markets than to try and take on new challenges?

More From CNBC.com

• Slideshow: Lambos For Less
• Fiat Feels Lucky on Opel, GM Has Misgivings
• GMAC Receives $7.5 Billion More in Federal Aid

For Chrysler's sake, let's hope the Fiat deal works for them. Going by the poor success rate of mergers and takeovers in the auto industry, there aren't many "happily ever after" stories. It may just be a matter of time before Chrysler gets left behind again by its white knight of the moment.

© 2009 CNBC.com