U.S. automaker Chrysler LLC neared approval for its sale to a group led by Italy's Fiat SpA after three days of testimony ended and parties shifted their attention to 350 objections -- although opponents are likely to file immediate appeals.
Chrysler wants to sell most of its assets to a New Chrysler owned by Fiat
Unwanted plants and businesses would remain in bankruptcy court to settle outstanding claims and liabilities.
Approval would be a victory for the White House, which had been criticized by many bankruptcy specialists for setting a seemingly unrealistic goal of bringing the automaker's operations through Chapter 11 in less than 60 days.
Opponents to the sale who have filed the objections -- which include debtholders, suppliers and dealers that will be closed -- have been using testimony from executives of Chrysler to show that they could have avoided bankruptcy or offered more to creditors.
Ronald Kolka, Chrysler's chief financial officer, told the court that Chrysler's plan for a restructuring of the company, which it finalized two weeks before its bankruptcy filing, would have provided more for creditors. The plan showed Chrysler estimated a restructured company would have been more profitable in 2009 and 2010 than if it had sealed an alliance with Fiat.
The government, which was keeping Chrysler afloat with emergency funds, rejected that restructured plan in favor of bankruptcy, Kolka said. He said banks also rejected the plan for a restructured Chrysler and said they would only negotiate with the government.
Opponents to the sale also called three dealers to the stand to attack Chrysler's business judgment for closing their stores.
I've been devastated and left for dead and there's no one out there to help us, said Colleen McDonald. Chrysler plans to shut both of her suburban Detroit dealerships, which are located within several miles of other locations selling Chrysler products.
She described how Chrysler had recognized her dealerships for being among the top 100 of company's more than 3,000 franchises.
McDonald and the other dealers also told of Chrysler begging them in the first months of 2009 to buy more cars to help the company.
A Houston-based dealer, Robert Archer, said Chrysler Co-Chairman Jim Press had threatened dealers who were reluctant to place orders, telling them early this year that the company had a very long memory.
Archer said his three dealerships ordered 200 unneeded Dodge trucks and cars. The only thing worse than having too much inventory is having the company that gives us franchises go out of business, he said.
Archer and McDonald said losing the franchises will leave them without a license to sell new cars after June 9. Chrysler said it is helping them find dealers willing to take the cars.
Chrysler announced about two weeks after it filed for bankruptcy that it was closing 25 percent of its dealerships. The company's chief executive, Robert Nardelli, told the court on Thursday that bankruptcy had given Chrysler a chance to bring forward a long-term plan to trim the number of dealerships.
Participants in the hearings said the length of the testimony and nature of the questioning suggested sale opponents were building a record for use in appeals likely to be filed soon.
Despite the length of the sale hearings, the case has sailed through court, largely thanks to government financing of the bankruptcy and a willing buyer in Fiat.
To preserve cash, Chrysler shut its operations when it filed for bankruptcy, which added to the urgency of the case.
Nardelli and other witnesses argued that the quick sale was critical to preserve the value of its operations, save more than 100,000 auto-related jobs and prevent further shock waves.
The sale would free the automaker of $6.9 billion of loans and cumbersome retiree benefits that it blamed for its struggles against more nimble competitors.
By teaming up with Fiat, Chrysler could expand beyond the U.S. market and gain technology needed to diversify a product line now heavily weighted toward gasoline-thirsty trucks and SUVs.
The case is In re Chrysler LLC, US Bankruptcy Court, Southern District of New York, No. 09-50002.
(Additional reporting by Chelsea Emery, Emily Chasan and Ajay Kamalakaran; Editing by Steve Orlofsky and Gerald E. McCormick)