Italian carmaker Fiat gets Chrysler's productive assets for the Chrysler, Jeep and Dodge brands.
Judge Arthur Gonzales sitting in the U.S. Bankruptcy Court for the Southern District of New York has approved the sale of virtually all of the good assets of bankrupt Chrysler LLC to Fiat SpA. The creditors, dealers and product liability lawyers who were the only significant objectors to the Chrysler sale were overruled by the judge.
No other “Qualified Bid” was received by Chrysler under the Bidding Procedures previously approved by the judge.
Fiat will get the assets related to the research, design, manufacturing, production, assembly and distribution of passenger cars, trucks and other vehicles, including prototypes, under brand names that include Chrysler, Jeep and Dodge.
The case has moved exactly along the lines that members the U.S. Treasury’s Auto Task Force outlined in a background briefing to media on April 30th when President Obama made the restructuring announcement and Chrysler LLC filed for court protection. Pundits who said it couldn’t be done swiftly have been proven wrong.
It is a triumph of common sense over narrowly legalistic arguments by lawyers for the debtors. Simply put, the “quick rinse bankruptcy” backed by funding from U.S. taxpayers is the only way to give Chrysler and soon GM a chance – and it is just a chance – to survive.
Sure there were decades of failed decisions and non-competitive product lines, but it was the ongoing Great Recession, which has the world teetering on the edge of depression, that forced the final liquidity crisis at Chrysler as sales plummeted. The sales decline was caused by the speculative abuses and fraud of unregulated U.S. finance capitalism that collapsed the credit markets.
A recent study said unsuccessful auto bankruptcies would reduce employment in the United States by more than 1.3 million jobs by December 2009. This analysis comes from the Center for Automotive Research (CAR) in Ann Arbor, Michigan. CAR derives much of its income from auto companies, so it is hardly disinterested in this fight, but its estimate is tough to argue with.
“Our model estimates that a successful bankruptcy process for both GM and Chrysler would have a major impact on the U.S. economy in terms of the maintenance of wages, social security receipts, personal income taxes paid, and a reduction in the need for transfer payments,” said Sean McAlinden, CAR chief economist and the study’s leader.
In the case of unsuccessful bankruptcies — where the companies do not re-emerge — the government stands to lose revenue on the level of $37 billion in the first two years alone, says CAR.