Chrysler, Fiat Seek Accelerated Appeals Process
Chrysler and Fiat have asked a bankruptcy court that approved their merger to shorten the process for appeals and bypass the U.S. District Court, according to a court documents.
Attorneys for the two car companies argue that going straight to the Court of Appeals will help ensure the sale can be completed before the June 15 deadline for closing the agreement.
Judge Arthur Gonzalez on Sunday approved the sale of most of Chrysler's assets to Fiat, a union-aligned trust and the governments of the United States and Canada. The group paid $2 billion to secured lenders.
Lawyers for three Indiana pension funds filed a notice Monday to appeal the Bankruptcy Court's approval of the sale to the U.S. District Court in Manhattan, according to court documents.
The judge said he would enter a final order for the sale on Monday. After that, the funds will appeal to district court, according to their attorney, Glenn Kurtz of White & Case of New York.
Meanwhile, President Barack Obama says a court's decision to approve the sale of Chrysler's assets has given the automaker "a new lease on life."
In a statement, the president said the deal will allow Chrysler to "successfully emerge from bankruptcy as a new, stronger, more competitive company for the future."
Chrysler filed for bankruptcy in April. The sale to Fiat means the company could be out of bankruptcy within the government's 30 to 60 day time frame.
Judge Arthur Gonzalez said in his ruling late Sunday that a speedy sale -- the centerpiece of a restructuring plan backed by President Barack Obama's automotive task force -- was needed to keep the value of Chrysler from deteriorating and would provide a better return for the company's stakeholders than if it had chosen to liquidate.
"Any material delay would result in substantial costs in several areas, including the amounts required to restart the operations, loss of skilled workers, loss of suppliers and dealers who could be forced to go out of business in the interim, and the erosion of consumer confidence," Gonzalez wrote in his opinion. "In addition, delay may vitiate several vital agreements negotiated amongst the debtors and various constituents."
As a result, the proposed sale must be approved in order to preserve the value of Chrysler's business and what is ultimately left for its stakeholders, Gonzalez said.
"With this approval, the new Chrysler Group is created and can prepare to launch as a vibrant new company formed with Fiat," Robert Nardelli, Chrysler's outgoing chairman and chief executive, said in a statement.
Nardelli is slated to leave Chrysler once the sale is final.
"While this has been an extremely difficult chapter in Chrysler's history for all involved, the new company and its customers, employees and suppliers can now begin on a fresh page," Nardelli said.
The ruling came ahead of fellow U.S.-automaker General Motors government-backed bankruptcy protection filing. The Detroit-based automaker filed for Chapter 11 in New York's Southern District early Monday.
Chrysler has maintained that selling the bulk of its assets to Fiat Group SpA is the only way it can avoid selling itself off piece by piece. If a deal does not close by June 15, the Italian automaker has the option of pulling out.
As part of Chrysler's government-backed restructuring plan, a UAW trust that will provide health care for hourly Chrysler retirees will receive a 55 percent stake in the new company, while Fiat will get a 20 percent stake that can ultimately grow to 35 percent.
The remaining 10 percent of the company will be owned by the U.S. and Canadian governments.
In the days leading up to Chrysler's Chapter 11 filing, the automaker struck a deal with the majority of secured lenders to give them $2 billion in cash, or 29 cents on the dollar, to erase the $6.9 billion in debt. But some of the debtholders balked and the automaker was forced to file for bankruptcy protection on April 30.
Besides the Indiana funds, a group of over 300 Chrysler dealers slated to lose their franchises under the company's restructuring also objected to the sale. A separate hearing to address Chrysler's motion to terminate 789 franchises is scheduled for Wednesday.
Objections were also filed by the automaker's suppliers, former employees and people with product-related claims against the company.