Chrysler has won interim approval from a US bankruptcy court to access a US$4.5bn loan as it tried to move ahead in its planned alliance with Fiat.
Go deeper with GlobalData
Meanwhile, a group of investment funds sought on Monday to block Chrysler’s plans with Fiat while United Auto Workers President Ron Gettelfinger said a union-aligned healthcare trust would work quickly to sell shares it would receive in a new Chrysler as soon as it in a position to do so, Reuters reported.
The UAW healthcare trust, which is likely to receive a 55% stake in a new Chrysler under a sale plan the automaker filed with the US bankruptcy court in New York, would be very stressed initially through its acceptance of Chrysler equity for part of the funding of the trust.
A bankruptcy judge approved Chrysler’s request to access the funds from US and Canadian governments, known as debtor-in-possession financing, as well as requests for the company to pay essential suppliers, dealers and its taxes, the report said.
Chrysler also asked the court on Monday for a swift hearing into its planned sale of its best assets into a new company owned by its union, Fiat and the government, eliciting immediate objections from some dissenting secured lenders.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe dissenting lenders, led by Oppenheimer Funds and Stairway Capital, argued that the sale proposal was “orchestrated entirely by the US treasury and foisted upon the debtors”.
A lawyer for the group, Tom Lauria, said some identified publicly in the politically charged reorganisation have received death threats “which they perceive as being bona fide.” Those lenders have notified police and the FBI, he said, according to Reuters.
President Barack Obama had last week publicly called the dissenters “speculators” for refusing to join Chrysler’s biggest banks in a government-brokered deal to wipe out Chrysler’s $6.9bn debt and move forward with the Fiat alliance.
Chrysler asked US judge Arthur Gonzalez to schedule a hearing as soon as 21 May to approve a $2bn sale of most of the automaker’s assets. The judge adjourned a hearing on the request until 14:30EDT on Tuesday.
“Absent a prompt sale, approved in the coming weeks, the value of the debtors’ assets will rapidly decline and the ability to achieve a going concern sale will be lost,” Chrysler said in court documents supporting the sale to Fiat cited by the news agency.
