CHRYSLER HAS urged a New York court to move quickly to approve its restructuring plan so the carmaker can reopen its factories, which it idled yesterday.
The company this week became the first major US car manufacturer to file for bankruptcy since 1933 after a few dozen secured creditors rejected a debt-reduction deal backed by the Obama administration.
Chrysler said the future of its 38,500 workers, 23 manufacturing plants and facilities, and 3,200 dealers employing 140,000 people depended on an early court decision.
“I don’t think that any American can doubt these are extraordinary times,” said Corinne Ball, Chrysler’s lead bankruptcy lawyer. “We have to move at a high speed.”
Some of Chrysler’s secured creditors, who claim they have been treated unfairly, are expected to file a motion soon objecting to the quick sale of the company to Fiat.
Under a partnership deal agreed on Thursday, Chrysler will give the Italian carmaker a 20 per cent equity stake in return for access to Fiat’s fuel-efficient technology. Fiat will manufacture some of its models at Chrysler plants and the cars will be marketed in the US as Chryslers.
Chrysler will receive $10.5 billion in US and Canadian government financing. The United Auto Workers union retirees’ healthcare fund will take a 55 per cent stake in the company.
President Barack Obama has said he wants a “surgical bankruptcy” for Chrysler that would allow the company to re-emerge in a restructured form within weeks.
However, legal experts warned yesterday that US bankruptcy proceedings were unpredictable and Chrysler could have to wait months before its case is resolved.
Big banks that hold about 70 per cent of Chrysler’s debt approved the debt-reduction proposals but a group of hedge funds and private equity firms holding the rest of the debt held out against the deal.
The holdouts complain that their big banking partners in Chrysler were too quick to make concessions because the Obama administration had also helped bail them out.
Ms Ball said that, unless the court quickly approved a deal similar to the agreement rejected by the smaller creditors, Chrysler’s shutdown could last too long to allow the company to recover.
“We need to keep driving forward. We need to protect our core value and we need to keep safe our customers. We idled all our plants – our workers, network, supply chain – they’re all waiting on us to start up again.”
The judge yesterday approved Chrysler’s request to continue to pay employee wages, salaries and incentives, and granted the company’s request to make good on customer and dealer obligations, including interim approval for warranties and extended service.
