Chrysler seeks to speed up bankruptcy deal with Fiat

04 May 2009

Chrysler LLC, under orders from President Barack Obama to complete bankruptcy proceedings as quickly as possible, may ask court approval to auction most of its assets in three weeks, according to reports.

Chrysler said it would ask a judge on Monday to approve the sale, creating an alliance with Italy's Fiat SpA, according to a filing with the US bankruptcy court in Manhattan. The transaction would help create the world's sixth-largest carmaker, a merger Chrysler wasn't able to do outside bankruptcy because of opposition by some of its secured lenders.

The company is asking bankruptcy judge Arthur Gonzalez, who is in charge of the case, to approve an auction quickly. Chrysler wants a schedule that would require creditor objections to the sale to be submitted by 11 May and an auction held by 22 May. However, the plans are supposed to be confidential till officially announced.

Under bankruptcy law, offers for bankrupt companies or their assets are generally subject to the possibility of higher bids at a court-supervised auction. Greenhill & Co, the financial adviser Chrysler hired in March, said the Fiat deal was fair.

''No potential buyers have expressed an interest in acquiring Chrysler as a going concern as an alternative to the proposed transaction with Fiat,'' Greenhill managing director Bradley Robins said in an affidavit filed with the court supporting the sale. ''Chrysler has insufficient funds to continue operating and no other providers of financing.''

The new entity, yet unnamed, will be the lead bidder in the auction and offer $2 billion for most of Chrysler's assets, while assuming some liabilities, Bloomberg quoted a source as saying. The new company would be owned by an employee association, Fiat, the US treasury and the Canadian government, Chrysler has said.