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Federal bankruptcy judge approves sale of Chrysler assets to Fiat

[JURIST] A federal bankruptcy judge on Sunday approved the sale of most of the assets currently held by Chrysler Group to Italian automaker Fiat S.p.A. [corporate websites]. Judge Arthur Gonzales of the US Bankruptcy Court for the Southern District of New York [official website] approved a bankruptcy plan that would transfer 55 percent of Chrysler to a United Auto Workers (UAW) [union website] retiree trust and 20 percent to Fiat, with the US and Canadian governments each retaining a minority share. The UAW trust would take over responsibility [agreement, PDF] for retiree health care in exchange for a larger ownership stake in the restructured Chrysler. A group of Indiana pension funds that acquired $42.5 million in secured Chrysler debt last year said they would appeal [WP report] the decision because it is unfairly biased toward unsecured creditors like UAW.

Chrysler filed for bankruptcy protection [case materials] in April under Chapter 11 [text] of the US Bankruptcy Code after failing to negotiate the return of $6.9 billion in debt for $2 billion in cash with secured debt holders. The other members of Detroit's "Big Three" automakers have also faced financial troubles recently. General Motors [corporate website] filed [JURIST report] for bankruptcy [petition, PDF] on Monday. Ford Motor Company [corporate website] is seeking to regain lost market share [WSJ report] while its domestic rivals are involved in bankruptcy proceedings.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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