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Federal bankruptcy judge approves sale of Chrysler assets to Fiat

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] A federal bankruptcy judge on Sunday approved the sale of most of the assets currently held by Chrysler Group to Italian automaker Fiat S.p.A.. Judge Arthur Gonzales of the US Bankruptcy Court for the Southern District of New York approved a bankruptcy plan that would transfer 55 percent of Chrysler to a United Auto Workers (UAW) retiree trust and 20 percent to Fiat, with the US and Canadian governments each retaining a minority share. The UAW trust would take over responsibility for retiree health care in exchange for a larger ownership stake in the restructured Chrysler. A group of Indiana pension funds that acquired $42.5 million in secured Chrysler debt last year said they would appeal the decision because it is unfairly biased toward unsecured creditors like UAW. Chrysler filed for bankruptcy protection in April under Chapter 11 of the US Bankruptcy Code after failing to negotiate the return of $6.9 billion in debt for $2 billion in cash with secured debt holders. The other members of Detroit's "Big Three" automakers have also faced financial troubles recently. General Motors filed for bankruptcy on Monday. Ford Motor Company is seeking to regain lost market share while it's domestic rivals are involved in bankruptcy proceedings.

Full post as published by JURIST - The Paper Chase on June 01, 2009 (boomark / email).