The Detroit News
Saturday, May 30, 2009
New Chrysler days from emerging
Quick regrouping from bankruptcy sets example for industry
Alisa Priddle / The Detroit News
New York — The fate of the newest incarnation of Chrysler, poised to emerge in Metro Detroit, won’t be known until Monday or Tuesday.
It marks an unexpected delay in a bankruptcy process that has surprised many for its quickness.
Closing arguments on the sale of assets of the bankrupt Chrysler LLC to a group headed by Italy’s Fiat Spa continued late Friday with the expectation Judge Arthur Gonzalez would rule immediately and not hold the case over into the weekend. But three days of testimony ended with his announcement he would render his decision Monday at the earliest.
Gonzalez said he will also consider Chrysler’s request to waive the 10-day waiting period to close and said objections should be filed in writing today and will be incorporated into the decision.
Once the sale is approved — as is expected — the Chrysler Group LLC formation will be official.
The ending of the Chrysler asset sale case comes as crosstown rival General Motors Corp. prepares its own bankruptcy filing and finishes its restructuring measures. GM on Friday tentatively reached a deal with Magna International Inc. for its Adam Opel division in Europe and got money saving concessions from the United Auto Workers who approved a contract ratification.
The new Chrysler will have the tools it needs to start operations a month after the U.S. and Canadian governments pushed an insolvent Chrysler to file Chapter 11 in return for billions in debtor-in-possession financing. Already in Auburn Hills, top Fiat executives were meeting with Chrysler officials to get the new company up and running.
“Chrysler did it in seemingly record time,” said analyst Joe Phillippi of AutoTrends Consulting in Short Hills, NJ.
“If it had dragged out as people thought it would in the normal bankruptcy process and without government guarantees for warranties and financing, it would have ended up like Delphi (which has been in bankruptcy for four years),” Phillippi said.
The U.S. government has promised a further $6 billion to the new Chrysler Group that will make Chrysler, Dodge, Jeep and eventually Fiat cars and trucks to be sold around the world.
At least 34 hours of testimony have been heard, thousands of legal documents filed and almost 350 objections made in the case.
When the legal dust settles, it could be a while before workers are called back to make vehicles. Chrysler idled its plants when it filed for Chapter 11 on April 30, but sales remain sluggish industrywide and almost 300,000 unsold Chrysler vehicles remain.
The new automaker, to be run by Fiat CEO Sergio Marchionne, will be smaller than the old Chrysler after restructuring resulted in the shedding of assets, workers and other cutbacks.
That includes the company’s dealer base, too.
Richard Mealey, president of Birmingham Chrysler Jeep in Troy, and Colleen McDonald, who owns Livonia Chrysler Jeep and Century Dodge in Taylor, are among the 789 dealers whose franchise deals will be terminated June 9. They took the stand Friday to protest the asset sale.
“I feel like I’ve been raped and left for dead,” McDonald told the court.
Metro Detroit dealership owner Colleen McDonald, with her attorney David Einstandig, testified Friday in U.S. Bankruptcy Court proceedings. (Louis Lanzano / Associated Press)