- The Washington Times - Wednesday, June 3, 2009

Chrysler LLC’s attempt to emerge quickly from bankruptcy faces several new hurdles.

The U.S. Court of Appeals for the Second Circuit said late Tuesday it would hear an appeal by three Indiana state pension funds related to Chrysler selling most of its assets to a group led by Italian automaker Fiat.

The group owns roughly $42 million of Chrysler’s $6.9 billion secured debt and says the automaker’s bankruptcy plan to sell the assets does not provide them with a sufficient return.

The Big Three automaker filed for bankruptcy April 30 in a U.S. court in New York under the direction of the Obama administration, which loaned the company billions to avoid a total collapse.

Judge Arthur Gonzalez ruled Sunday night that Chrysler should promptly sell the assets because stakeholders would get a better return than if the company liquidated. He also said the Indiana group’s case should be heard in an appeals courts because it can make a swift ruling. The deadline with the Fiat-led group is June 15.

Judge Gonzalez will hear arguments Wednesday on whether the automaker can terminate 789 of its 3,200 dealerships as part of its restructuring plan.

Chrysler executives and dealers are scheduled to testify at the hearing, scheduled to begin at 11 a.m. EDT.

The Big Three automaker wants to eliminate dealerships that are either unprofitable or too close to more successful ones.

The dealers have questioned the numbers and say they operate at no additional cost to Chrysler and their closure will result in the elimination of thousands of jobs.

Chrysler was the first of the Big Three to file for Chapter 11 bankruptcy. General Motors Co. filed Monday. Ford is the only one that did not accept a government bailout or file for bankruptcy.

Also Wednesday, the Senate Commerce Committee is scheduled to hold a hearing on GM and Chrysler closings dealership.

Among those scheduled to testify are GM Chief Executive Fritz Henderson and Chrysler President James Press.

The Capitol Hill and court hearings continue as U.S. Cabinet secretaries on Wednesday go to the Midwest, hit hardest by the auto-industry collapse, to discuss how the administration’s American Recovery and Reinvestment Act will help them.

Officials in Michigan, Ohio, Indiana and Wisconsin are asking for additional money from the recovery funds. Michigan has the country’s highest unemployment rate.

Secretary of Commerce Gary Locke will be Holt, Mich. Environmental Protection Agency Administrator Lisa Jackson will be in Columbus and Cincinnati, Ohio. Labor Secretary Hilda Solis and Ed Montgomery, the administration’s director of Recovery for Auto Communities and Workers, will be in Cleveland. The White House said Wednesday the Labor Department will release $88.2 million in unemployment-related money to Ohio and roughly $50 million more to Michigan for trade-related issues.

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