Financial bonanza

NEW YORK–Chrysler tried to fend off hundreds of objections yesterday to its plan to sell most of its assets to an Italian automaker, hoping in a marathon court session to save itself from liquidation.

The company was waiting to see whether Judge Arthur Gonzalez of U.S. Bankruptcy Court would approve the sale. If he does, Chrysler could emerge from bankruptcy within weeks.

The hearing was expected to continue well into the night, with a decision perhaps not coming until the wee hours of this morning.

Attorneys for Chrysler say unloading the assets to a group led by Italy’s Fiat Group SpA is the company’s only hope to avoid selling itself off piece by piece. They say a leaner Chrysler could shift more easily to smaller, more fuel-efficient cars.

But many Chrysler dealers, debtholders and former employees say they are being steamrolled by the proceedings. Fiat could back out if the deal doesn’t close by June 15.

On the other hand, by emerging so soon from bankruptcy protection, Chrysler would defy skeptics who insisted a filing would leave the automaker mired in court for months.

Both Chrysler LLC and General Motors Corp., which now appears almost certain to file for bankruptcy protection, have been hobbled by the health and pension costs of tens of thousands of unionized retirees, in addition to falling sales car insurance quote.

Bringing Chrysler and Fiat together would dramatically change the face of the third-largest American automaker. The plan calls for Fiat to bring a handful of its small cars to the U.S. in the coming years, filling one of Chrysler’s biggest product gaps. Chrysler entered bankruptcy with a few new vehicles in the works. It plans to begin selling an electric car next year and have six electric vehicles by 2014.

Even if Chrysler comes out of bankruptcy, challenges are just beginning. Until the Fiat vehicles arrive, it will have to rely on a product lineup that lost billions last year.

By yesterday morning, parts suppliers, dealers and former employees had filed 337 objections to the Chrysler-Fiat deal, although most had been resolved or deferred before the start of the hearing.

Gonzalez denied a motion by a pair of Indiana state pension funds and a state construction fund, holding a combined $42.5 million (U.S.) of Chrysler’s $6.9 billion in secured debt, for more time to prepare.

Chrysler had already reached agreement with most bondholders in which they’d get a combined $2 billion in a deal worth 29 cents on the dollar.

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Filed under: management by Pascal