5 May 2009

Chrysler seeks quick sale to Fiat

9:05 am on 5 May 2009

Chrysler has asked the US Bankruptcy Court for a swift hearing into its planned sale to Fiat SpA of Italy.

Chrysler filed for bankruptcy on Thursday, planning an emergence from court protection in as little as 30 days. It has asked for the sale to be approved by 21 May.

The Chrysler bankruptcy is one of the biggest involving a public company in the United States.

The company lost $US16.8 billion in 2008 and expects to lose $US4.7 billion in 2009.

According to documents filed with the court, Chrysler asked Judge Arthur Gonzalez on Monday to set a hearing by 21 May to approve a $US2 billion sale of most of its assets out of bankruptcy. This would clear the way for a merger with Fiat.

Judge Gonzalez adjourned a hearing until 2.30 pm EDT (1830 GMT) on Tuesday.

The hearing is widely seen as almost being a dry run for a reorganization of General Motors Corp: GM faces a restructuring deadline of 1 June.

Deal details

Fiat would start with a 20% stake in the new Chrysler, which would grow to 35%.

Fiat chief executive Sergio Marchionne is expected to run the merged operations.

Chrysler also asked the Bankruptcy Court to approve a $US35 million breakup fee for Fiat if the sale deal falls apart.

The automaker has closed all of its plants for the reorganization.

Chrysler has 30 plants in the United States, Canada and Mexico. Five assembly plants, a stamping plant, an engine plant and an axle facility in the United States are expressly excluded from the planned sale.