The order is signed, and unless another bidder emerges, the Fiat takeover is about to be sealed and delivered.

The U.S. Bankruptcy Court in Manhattan has just entered an order approving a process for the sale of virtually all of Chrysler’s assets. Unless an alternative offer arises, the deal with Fiat will proceed before 60 days have expired from the original April 30, 2009 filing, as the U.S. Treasury Department maintained.

In a clear victory for Main Street, the dissident creditors that were singled out as speculators by President Obama last month also withdrew from the proceedings today. The law firm representing these parties — after months of unsubstantiated claims about how much debt was held, along with an ongoing refusal to reveal what firms held the debt, all the while trying the case in the media — met the real court.  

Earlier this week, Judge Gonzalez ordered White & Case, the law firm representing the dissident debtholders, to reveal who their clients were, what debt they actually held, and how much they paid for it.

“After a great deal of soul-searching and quite frankly agony, Chrysler’s Non-TARP lenders concluded they just don’t have the critical mass to withstand the enormous pressure and machinery of the U.S. government,” said Tom Lauria, the White & Case attorney representing the group. “As a result, they have collectively withdrawn their participation in the court case.”

Hastening the withdrawal, no doubt, was the fact that the group had nowhere near the secured debt that news organizations such as the New York Times or the wire services were publicizing. As a famous jurist once postulated “sunshine is the best disinfectant.”

The momentum for an early resolution of the Chrysler matter now appears to be overwhelming, since the substantial new financial commitments from the U.S. and Canadian governments require the consummation of a transaction with Fiat within 60 days and make Debtor in Possession financing available for only that period.   

An alternative offer would require that alternative financing be arranged, a highly unlikely scenario in the current credit crisis. It would also require the cooperation of Chrysler’s largest debtholder, the U.S. Treasury, as well as the Canadian Federal and Ontario provincial governments. They all have already backed the Fiat deal.

Furthermore, the recently announced agreements with the UAW and CAW providing for modifications to the collective bargaining agreement for active employees and for a new schedule of contributions to a  the health care fund (VEBA) that will provide retiree medical benefits is also conditioned on the expeditious consummation of the Fiat transaction.

Court documents and affidavits show that Chrysler has already conducted discussions with Nissan, GM, Volkswagen, Tata Motors, Magna, GAZ, Hyundai, Honda and Toyota, and others over an extended period of time.

These discussions have been fruitless. There appears no viable alternative to the proposed alliance with Fiat.   

Still, the presiding judge, the Honorable Arthur Gonzalez, has set up a process that will be used to confirm that the Fiat transaction represents the best and highest bid for Chrysler’s assets, or promptly identify any other higher and better alternatives. To be successful, an alternative bidder would have to surpass the value of the terms of the agreement with Fiat, which the court defines as at least $100 million more than the $2 billion in cash that will become an asset of a reorganized Chrysler that the Fiat deal is contingent upon.

As part of this process, a “Sale Notice” will be circulated and notice will also be published in major newspapers to provide opportunity for any interested party to emerge. How any financial institution with the wherewithal to take on the Chrysler mess could be unaware of the bankruptcy is beyond my belief.

The court has set May 20 as the deadline for the submission of bids; May 26 as the deadline for the notice of designation of lead bidder; and May 27, 2009 as the date for the Sale Hearing to consider the approval of the proposed sale.