Bankruptcy Judge May Bless Chrysler-Fiat Union This Week
By Michelle Krebs May 26, 2009NEW YORK -- The Chrysler-Fiat union could become official as early as Wednesday.
Judge Arthur Gonzalez of the Southern District of New York's bankruptcy court in Manhattan could rule on Wednesday morning to allow Chrysler to sell its select assets to a new company under control of Italy's Fiat. If that approval is granted, a deal to create a merged Chrysler-Fiat with the backing of the U.S. government could be closed by the middle of next month.
Still, the deal faces angry, albeit likely futile opposition, from the 789 dealers that Chrysler has said it will drop by June 9.
"Instead of allowing the free market to determine which dealers survive, Chrysler and the government are effectively playing the roles of judge, jury and executioner," a committee of dealers opposed to the franchise terminations said in an e-mail seeking support for their position on Monday, Reuters reported.
About 330 Chrysler dealers from 47 states have joined the group, lawyers for the group said in a court filing on Monday, Reuters reported.
In addition, Chrysler faces a challenge from the state of Indiana, which is protesting Chrysler's Chapter 11 proceeding on behalf of three state pension funds, which total $17 million in value. The state's treasurer is arguing that the cumulative loss on these investments under the Chrysler-Fiat merger proposal would be approximately $2 million.
Chrysler attorneys argue that giving into Indiana's demand would lead to Chrysler's liquidation.
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