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Chrysler sale to Fiat effective Friday

Chrysler sale to Fiat effective Friday
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First Published: Tue, Jun 02 2009. 09 36 AM IST
Updated: Tue, Jun 02 2009. 09 36 AM IST
New York: Chrysler’s sale of most of its assets to Fiat will be effective at noon on Friday, a judge said on Monday, clearing the way for a “New Chrysler” to emerge from bankruptcy.
Judge Arthur Gonzalez entered his final order approving the sale but shortened the usual 10-day period before such a sale becomes effective to four days.
Most of Chrysler’s assets will be sold to the Italian automaker, a union-aligned trust and the governments of the United States and Canada. The group paid $2 billion to secured lenders.
Unwanted assets including several factories will remain in bankruptcy and liquidated to satisfy various claims.
More than 340 objections to the sale were filed, with the most vigorous opposition mounted by three Indiana pension funds that hold Chrysler loans.
The funds’s lawyer, Glenn Kurtz of White & Case in New York, said they will appeal to the Court of Appeals for the Second Circuit.
Chrysler, which filed for bankruptcy on 30 April, said the rush sale was needed to preserve the value of its assets and therefore provide more money for creditors.
The automaker’s attorneys on Monday asked that appeals of the sale be heard by the Court of Appeals for the Second Circuit, bypassing the District Court. The attorneys for Chrysler argued a shortened appeals process would help ensure the sale can be completed before the 15 June deadline for closing the agreement.
Indiana’s treasurer Richard Mourdock said the funds that he oversees have the right to pursue their appeals against the sale. He has said the transaction upends the traditional priority of repayment in a bankruptcy by giving more to unions, which are unsecured creditors, than holders of secured loans.
“This is about much more than the Chrysler Corp, it’s about whether secured creditors have the same standing that they’ve had for hundreds of years,” said Mourdock.
Chrysler’s lead attorney, Corinne Ball, said last week she thought the pension plans were just whining.
“I’m not whining, I’m doing my job,” said Mourdock. “I’m following my oath of office.”
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First Published: Tue, Jun 02 2009. 09 36 AM IST
More Topics: Chrysler | Fiat | Auto | Bankruptcy | Italy |