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Judge OKs Chrysler's steps toward sale to Fiat
(Agencies)
Updated: 2009-05-06 14:47 But those representing a dissident group of Chrysler lenders said the sale procedures were designed to prevent other bidders from coming forward and argued for Gonzales to grant more time for potential buyers to do the research they needed and make appropriate offers. On Monday, the same group of lenders had objected to a Chrysler motion to allow the company to access $4.5 billion in bankruptcy financing, saying that it was too closely tied to the proposed sale. Thomas Lauria, an attorney for the lenders group, argued that no other legitimate bids for Chrysler have surfaced in the last two years because there hasn't been a proper process in place for them to be submitted.
"The fact is, the liquidation value of the company was materially reduced over that period of time," Lauria said. "And at the same time, the company was burning up all of its cash and getting ready to tell us all we had a lot of things to do and to hurry up." Early on in Tuesday's hearing, Gonzales ruled that the identities of the dissident group's members do not need to be sealed, despite arguments from their attorney that death threats were made against some of them. Lauria said the names should be sealed by the court because some of the members had received threats of violence after been singled out by President Obama as the cause of Chrysler's bankruptcy filing. The group of holdout lenders had refused a deal that would amount to 29 cents on the dollar to dissolve what they're owed and go along with the government's restructuring plan for Chrysler. President Barack Obama said Thursday that the lenders were seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles, including the Fiat deal and a cost-cutting pact that the United Auto Workers ratified last week. But Robert Hamilton, an attorney for Chrysler, said those threats only amounted to four or five "rants" on a newspaper Web site. Gonzales gave the lenders group until 12 noon EDT Wednesday to file their list of members with the court. Michigan's state attorney general also filed an objection Tuesday over concerns that if the sale to Fiat goes through, the new company formed wouldn't meet obligations to a state workers' compensation fund. But Gonzales said the objection could be resolved later if and when he is asked to rule on a final sale motion. As the afternoon hearing stretched into the night, Chrysler turnaround officials and executives testified about the events of the months leading up to the company's bankruptcy protection filing. Scott Garberding, Chrysler's executive vice president for procurement, described efforts to form alliances with automakers other than Fiat, including General Motors Corp. and Nissan, in recent years. In addition, Robert Manzo, an executive director with Capstone Advisory Group LLC and one of Chrysler's top restructuring advisers, described how the automaker found itself with few options and dwindling cash in the month leading up to Chrysler's government-imposed April 30 restructuring deadline. "Given the options available over the past 30 days and the lack of liquidity, we could choose a transaction along the lines of the Fiat deal with the help of the US Treasury or face immediate liquidation," Manzo said.
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