- The Washington Times - Saturday, May 2, 2009

NEW YORK | Attorneys for Chrysler LLC said the company will file a motion by Saturday to sell substantially all of its assets to Italian automaker Fiat Group SpA, but that won’t include eight plants, including five that the automaker revealed it will close by the end of next year.

While Chrysler faced its first hearing Friday in Manhattan bankruptcy court, court documents showed that the ailing automaker plans to close plants in Michigan, Missouri, Ohio and Wisconsin that employ about 4,800 people. Chrysler said they will be offered jobs at other plants.

The company also announced that President and Vice Chairman Tom LaSorda is retiring effective immediately.

Judge Arthur Gonzalez approved a series of motions at Friday’s swift hearing, launching a chain of events intended to ensure Chrysler’s bankruptcy process is the quick and “surgical” one the company and the U.S. government have promised.

But what could prove to be the case’s biggest challenge still lies ahead. Chrysler must eventually deal with creditors who refused to come to a deal that would have erased much of the automaker’s debt and might have avoided a bankruptcy filing in the first place.

Another hearing was scheduled for Monday morning, where Chrysler attorneys will ask Judge Gonzalez to let the company start using $4.5 billion in loans from the U.S. and Canadian governments to keep operating under bankruptcy protection.

Chrysler attorney Corinne Ball, of the firm Jones Day, said the loans and the sale to Fiat represent “an important lifeline” for Chrysler’s dealers, supplies and customers.

“We have to move at a good speed throughout this proceeding,” she told Judge Gonzalez.

Judge Gonzalez wasted no time, opening the meeting with just five words: “Please be seated. Debtor’s counsel?”

By the end of the hearing, the judge had decided six motions in about an hour.

Chrysler, the nation’s third-largest car manufacturer, filed for bankruptcy protection Thursday after a group of creditors defied government pressure to wipe out the automaker’s debt. The company plans to emerge in as little as 30 days as a leaner, more nimble company, with Fiat potentially becoming the majority owner.

In return, the federal government agreed to give Chrysler up to $8 billion in additional financing, on top of the $4 billion the company already has received.

Until the deal with Fiat closes, the automaker plans to idle all of its plants in the United States. Chrysler’s Canadian assembly plants also halted production Friday because of parts shortages stemming from the U.S. shutdown.

In court documents, Chrysler said it won’t keep its Sterling Heights, Mich., plant that makes Chrysler Sebrings and Dodge Avengers, and the Conner Avenue plant in Detroit that makes Dodge Vipers. The St. Louis North plant that makes Dodge Ram pickups will also close, along with Chrysler’s Twinsburg, Ohio, parts stamping plant and Kenosha, Wis., engine plant .

Two other plants that will be left out of the Fiat sale are the St. Louis South plant and an assembly plant in Newark, Del., which were idled last year. Another facility, Chrysler’s Detroit Axle plant, is already scheduled to be replaced by a new factory near Port Huron, Mich.

The “new Chrysler” would lease the eight plants, then shutter them by December 2010.

“While some facilities may close, substantially all Chrysler employees will be offered employment with the new company,” Chrysler spokeswoman Dianna Gutierrez said.

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