Fiat-Chrysler Deal to Close Today, Says Nardelli
By Brendan Moore
In surprising news, Bob Nardelli, current CEO of Chrysler, told reporters late yesterday that he expects the sale of most of Chrysler’s assets to Fiat to be consummated today.
According to reporters that were there at the press conference and some of the other participants in the hearing, most of the people that heard Nardelli’s statement were surprised by the news. An attorney from one of the pension funds trying to block the sale immediately asked Nardelli if he meant that the sale would close today with the required federal antitrust approval. Nardelli replied in the affirmative.
People scoffed when the US Treasury Department set a 30-60 day target for Chrysler to emerge from bankruptcy, but if Nardelli is correct, they will make that goal easily. Of course, it’s worth noting that the federal government provided all the early financing, the bankruptcy financing, and, shoved Chrysler towards Fiat, a maker of small, fuel-efficient cars. The Treasury Department, the Obama Administration’s proxy in this matter, has definitely had it their way so far. If the federal bankruptcy court approves the sale of Chrysler assets to Fiat today despite the objections heard so far and the hundreds of objections still scheduled to be heard in the future, that is quite a victory for the government and Fiat-Chrysler.
If the sale looks as if it will actually close tomorrow, you can be certain the hundreds of attorneys on the opposing side will ask the judge to postpone the sale, If that doesn’t work, you can bet there will be many appeals after the sale is completed.
The roster of those opposing the sale includes suppliers, debtholders, retirees, and of course, the almost 800 dealers that Chrysler wishes to shut down, who want the state dealer franchise laws to supersede federal law. The appeals will be filed immediately after any action by the court that gives Chrysler the right to move forward and discharge the bankruptcy.
Chrysler says it needs to go through bankruptcy in order to shed $6.9 billion USD in debt and some very expensive retiree benefits. It will gain small-car technology and a worldwide retail network through its “merger” with Fiat.
The entities objecting to Chrysler’s bankruptcy/sale are not opposed to Chrysler’s bankruptcy, per se. In the case of the debtholders, suppliers and the retirees, they are opposed to Chrysler not paying them. Their point of view is, “do whatever you want, but honor your obligations to us”. The dealers, meanwhile, are all for Chrysler’s bankruptcy as long as they’re invited to the party. Since they’re not, they want the bankruptcy court to prevent Chrysler from dropping them.
However, that’s what bankruptcy is for – casting off debt obligations, unwanted contracts, etc. It’s hard to see at this point how Chrysler (with the US Treasury Department backing them) will not prevail in their efforts to successfully discharge their bankruptcy and merge with Fiat.
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