Sale of most Chrysler assets to Fiat OK’d

NEW YORK (AP) — A federal bankruptcy judge approved the sale of most of Chrysler LLC’s assets to Italy’s Fiat, moving the American automaker a step closer to its goal of a quick exit from court protection.

But a trio of Indiana state pension and construction funds filed an appeal, saying that the ruling sets aside the rights of the company’s secured lenders while doling out the company’s assets to others.

Judge Arthur Gonzalez said in his ruling late Sunday that a speedy sale — the centerpiece of a restructuring plan backed by President Barack Obama’s automotive task force — was needed to keep the value of Chrysler from deteriorating and would provide a better return for the company’s stakeholders than if it had chosen to liquidate.

“Any material delay would result in substantial costs in several areas, including the amounts required to restart the operations, loss of skilled workers, loss of suppliers and dealers who could be forced to go out of business in the interim, and the erosion of consumer confidence,” Judge Gonzalez wrote in his opinion.

“In addition, delay may vitiate several vital agreements negotiated amongst the debtors and various constituents.”

As a result, the proposed sale must be approved in order to preserve the value of Auburn Hills, Mich.-based Chrysler’s business and what is ultimately left for its stakeholders, Judge Gonzalez said.

“With this approval, the new Chrysler Group is created and can prepare to launch as a vibrant new company formed with Fiat,” Robert Nardelli, Chrysler’s outgoing chairman and chief executive, said.

Nardelli is slated to leave Chrysler once the sale is final.

“While this has been an extremely difficult chapter in Chrysler’s history for all involved, the new company and its customers, employees and suppliers can now begin on a fresh page,” Nardelli said.

The ruling came ahead of fellow U.S.-automaker General Motors Corp.’s government-backed bankruptcy protection filing. The Detroit-based automaker filed for Chapter 11 in New York’s Southern District early Monday.

Judge Gonzalez’s ruling came after three marathon days of testimony last week, during which everyone from the automaker’s outgoing chief executive to dealers slated to lose their franchises took the stand.

Chrysler has maintained that selling the bulk of its assets to Fiat Group SpA is the only way it can avoid selling itself off piece by piece. In exchange for a stake in the new Chrysler, Fiat has agreed to share with it the technology it needs to create the smaller, more fuel-efficient vehicles now craved by U.S. drivers.

With the approval of the sale, Chrysler could emerge from Chapter 11 bankruptcy protection as soon as this week, defying observers who said that the company could linger under court oversight for years.