NEW YORK – Attorneys for Chrysler LLC said the company will file a motion by today to sell substantially all of its assets to Italian automaker Fiat Group SpA, but that won’t include eight plants, including five that the automaker revealed it will shutter by the end of next year.
While Chrysler faced its first hearing Friday in Manhattan bankruptcy court, court documents showed the ailing automaker plans to close plants in Michigan, Missouri, Ohio and Wisconsin that employ about 4,800 people. Chrysler said they will be offered jobs at other plants.
The company also announced President and Vice Chairman Tom LaSorda is retiring effective immediately.
Judge Arthur Gonzalez approved a series of motions at Friday’s swift hearing, launching a chain of events designed to ensure Chrysler’s bankruptcy process is the quick and “surgical” one the company and the U.S. government have promised.
But what could prove to be the case’s biggest challenge still lies ahead. Chrysler must eventually deal with creditors who refused to come to a deal that would have erased much of the automaker’s debt and might have avoided a bankruptcy filing in the first place.
Another hearing was scheduled for Monday morning, where Chrysler attorneys will ask Gonzalez to let the company start using $4.5 billion in loans from the U.S. and Canadian governments to keep operating under bankruptcy protection.
Chrysler attorney Corinne Ball, of the firm Jones Day, said the loans and the sale to Fiat represent “an important lifeline” for Chrysler’s dealers, supplies and customers.
“We have to move at a good speed throughout this proceeding,” she told Gonzalez.
Chrysler, the nation’s third-largest car manufacturer, filed for bankruptcy protection Thursday after a group of creditors defied government pressure to wipe out the automaker’s debt. The company plans to emerge in as little as 30 days as a leaner, more nimble company, with Fiat potentially becoming the majority owner.
In return, the federal government agreed to give Chrysler up to $8 billion in additional financing, on top of the $4 billion the company already has received.
Ball said that lawyers on Monday would ask to set a date for the first hearing on the sale of Chrysler’s assets to the “new Chrysler.”
In bankruptcy, assets are sold in a two-part process during which the court asks for competing bids. None is expected in Chrysler’s case, since documents show the company already tried to form alliances with dozens of companies, including Nissan-Renault, Toyota, Honda, Volkswagen and even General Motors Corp.
Heidi Sorvino, bankruptcy partner at Smith, Gambrell & Russell LLP, said a sale could be completed in 30 to 60 days.
“I think the sale will happen quickly,” she said. “The actual proceeding is going to take a long time.”
Until the deal with Fiat closes, the automaker plans to idle all of its plants in the U.S. Chrysler’s Canadian assembly plants also halted production Friday because of parts shortages stemming from the U.S. shutdown.
In court documents, Chrysler said it won’t keep its Sterling Heights, Mich., plant, its Conner Avenue plant in Detroit, or its St. Louis North plant.
Chrysler’s Twinsburg, Ohio, parts stamping plant and Kenosha, Wis., engine plant will also be shuttered.
Two other plants that will be left out of the Fiat sale are the St. Louis South plant and an assembly plant in Newark, Del., that were idled last year. Another facility, Chrysler’s Detroit Axle plant, is already scheduled to be replaced by a new factory near Port Huron, Mich.
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