Posted by Cassie Nist - email
NEW YORK (CNNMoney.com) -- A bankruptcy judge late Sunday approved the sale of most of Chrysler's assets to a group led by Italian automaker Fiat.
The ruling -- issued by Judge Arthur Gonzalez of U.S. Bankruptcy Court in New York -- was the latest step in Chrysler's Chapter 11 process.
"The debtors are receiving fair value for the assets being sold," Gonzalez wrote in his opinion. "Not one penny" of the debtor's assets is going to anyone other than the senior lenders, he wrote.
The ruling capped three days of hearings that included six hours of testimony from Bob Nardelli, who is serving as chief executive during the bankruptcy process. Much of the testimony featured cross-examination by lawyers representing three Indiana pension funds with a 1 percent stake in Chrysler that oppose the deal.
"The Hoosier retirees are getting ripped off," Indiana Treasurer Richard Mourdock told CNNMoney.com. "This is wrong and it's got to be stopped."
Mourdock said his state would lose $43 million if the bankruptcy were approved, though the retired teachers and police officers invested in the funds would not lose their pensions.
The process has been closely watched by General Motors, a much larger automaker that is expected to begin the bankruptcy process this week.
The judge's approval gives Chrysler the go-ahead to sell its best assets -- including its best-performing factories and dealerships -- to a newly formed incarnation of itself called the Chrysler Group.
The Chrysler Group would be controlled primarily by a United Auto Workers union trust, which would own a majority stake of 55 percent. The Italian automaker Fiat would own 20 percent initially, and eventually could increase its share to 35 percent. Minority stakes would go to governments: 8 percent for the United States and 2 percent for Canada.
The judge's ruling allows Chrysler to leave the assets that it doesn't want, including eight factories and franchise agreements with 789 dealerships, putting thousands of jobs in jeopardy.
To keep the company afloat, Chrysler received $4 billion from the U.S. Treasury Department in December and $4 billion more this year. But after many of the company's creditors rejected a debt-for-equity swap to help the company restructure, the Obama administration forced the automaker to seek Chapter 11 bankruptcy protection.
Chrysler filed for protection April 30. The ruling could help Chrysler meet President Barack Obama's goal of completing the bankruptcy process within 60 days.