Outgoing Chrysler CEO Robert Nardelli has said that entering bankruptcy, instead of liquidating, “best served” all the automaker’s stakeholders.

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According to a Dow Jones report, Nardelli told a New York bankruptcy court Chrysler faced two choices last month: liquidate or file for bankruptcy. Liquidation, he said, would have had a “cataclysmic impact” on the auto industry and the national economy.


“We turned every stone. We exhausted every amount of energy and intellect we could,” Nardelli said. “[Bankruptcy] was the decision that best served all constituents.”


Thursday’s hearing before Judge Arthur Gonzalez in Manhattan lasted nearly 14 hours and was adjourned to Friday morning – today will be its third day. Nardelli said he expected the deal to close by today, if approved by the judge. Nardelli said he also hoped to have regulatory approval of the deal in the US by Friday.


Thomas Lauria, a lawyer for a group of Indiana pension funds opposing the sale, said he planned to appeal if the sale is approved. An automatic stay of 10 days goes into effect if an appeal is filed. The judge was considering a motion to reduce that period.

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The pension funds have argued that the U.S. government “infected” Chrysler’s bankruptcy and forced the auto maker’s biggest lenders, which received government loans, to accept a $2 billion cash-for-debt deal, Dow Jones said.


Nardelli said he preferred the auto maker to continue as a standalone company, but US officials believed the best course was to seek an alliance with a partner, along with concessions from its secured lenders and the UAW. Chrysler wasn’t able to get all its lenders to agree to the concessions and filed for bankruptcy on 30 April.