Money Matters, Simplified.
Monday likely to be the D-Day for Chrysler
Stock of cars pile up at Chrysler dealerships, which the Michigan based automaker intends to close. The closure would entail selling cars at a considerably reduced price by the dealers, which would be devastating for them
New York, May 30: The world will have to wait until Monday to see whether a “New Chrysler” run by Italy's Fiat SpA (BIT: F) and jointly owned by Fiat, a union benefit trust, the U.S. Treasury and the Canadian government comes into existence or not.
The U.S. bankruptcy judge Arthur Gonzalez, who is overseeing the Auburn Hills, Michigan-based Chrysler LLC's bankruptcy case, said at a court hearing in Manhattan on Friday that he would issue an opinion on the automaker "sometime on Monday".
If the sale gets the go-ahead, Chrysler will have to focus on getting rid of eight of the manufacturing plants that will not be taken over by Fiat.
Fast track bankruptcy process
Chrysler, as also the other automakers, had been reeling under the ruthless economic pressures in recent times. Sales had slumped and 22 of its U.S. factories were shut on May 1. Therefore, a Chapter 11 filing was nothing but a Hobson’s choice for the once mighty automaker.
Many bankruptcy experts admonished the White House’s plan to run through Chrysler’s Chapter 11 filing in as less as 30 days. Many creditors of the automaker had pushed for modification of the entire bidding process to make it more competitive.
The creditors argued that the sale process was too quick for comfort and that the administration had set an artificially urgent schedule. They criticized that Chrysler’s way of going about things was "designed to prevent, not encourage, competitive bidding", and called the accelerated timetable an "absurdity".
Analyst Rebecca Lindland noted otherwise. She opined that it was in the best interest of Chrysler to speed up the sale process. Using an analogy, she said, "Anyone that's ever gone under anaesthesia knows you can always run into complications and the longer the surgery lasts the less chance of a successful outcome."
Of the over 300 objections filed by the irate creditors and dealers, majority are now withdrawn or resolved. Two notable objections, one from the 789 car dealers that Chrysler had proposed closing and the other from a group of Indiana state pension and construction funds, still stood.