- The Washington Times - Friday, May 29, 2009

NEW YORK | Chrysler Chief Executive Robert Nardelli said he expects the sale of the bulk of Chrysler’s assets to a group headed by Italy’s Fiat Group SpA to close Friday, assuming the judge overseeing the automaker’s bankruptcy case approves the deal.

Mr. Nardelli testified in court Thursday that he expects the required U.S. regulatory approvals for the sale to be in place by Friday and international approvals to follow shortly thereafter.

But it’s likely that if U.S. Judge Arthur Gonzalez does approve the deal, attorneys representing three Indiana state pension and construction funds, which hold Chrysler debt and are aggressively opposing the sale, will appeal the decision and force the company to postpone the closing. Fiat could back out if the deal doesn’t wrap up by June 15.

Chrysler LLC on Thursday began its second day of testimony to convince a bankruptcy judge that selling itself to Fiat was the best way to avoid liquidation.

If Judge Gonzalez approves the sale, as expected, the automaker could emerge from Chapter 11 bankruptcy protection within weeks. Chrysler filed for bankruptcy protection April 30.

The judge will eventually hear from various dissenters to the sale, including the funds that hold less than 1 percent of Chrysler’s secured debt.

Judge Gonzalez said he was prepared to continue the hearing into Friday if needed.

Attorneys for Chrysler say unloading its assets to a group led by Fiat is the only way to avoid selling off the automaker piece by piece. They say a leaner Chrysler could shift more easily to building smaller, more fuel-efficient cars.

But many Chrysler dealers, bondholders and former employees say they are being steamrolled by the exceptionally speedy bankruptcy court proceedings.

A quick exit from bankruptcy protection would defy skeptics, who insisted such a filing would leave the automaker mired in court for many months.

Mr. Nardelli said Chrysler attempted to negotiate with the holdout debt holders right up until the company’s filing, with the Treasury at one point upping its offer by $250 million to $2.25 billion.

In the end, he said Chrysler officials couldn’t justify liquidating the company instead of restructuring, given the number of jobs that would have been lost and communities that would be affected.

“I think it would have had a cataclysmic effect on the industry and the overall economy,” he said.

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