NEW YORK -- A US bankruptcy judge in New York cleared the way for the fast-track sale of collapsing auto giant Chrysler, with Fiat as the lead bidder.
Attorneys and staff from law firms representing Chrysler arrive at US Bankruptcy Court in New York May 5, 2009. [Agencies]
After a nearly eight-hour hearing, Judge Arthur Gonzales rejected arguments from a group of Chrysler lenders who called "illegal" the US government-backed restructuring plan unveiled last Thursday.
Gonzales told a packed federal courtroom that the plan was "a fair and ordinary process," stressing the "urgent need for the sale to be consummated."
Although Fiat now looks on track to rescue Chrysler from collapse, Gonzalez said that other bidders had the opportunity to compete.
Parties have until May 20 to present their offers before the court makes a final decision on May 27.
The dates were extended by about a week in response to court arguments from the lenders that the Chrysler sale promoted by President Barack Obama's government was unfair and left no time for competition.
Obama's administration has set a June 1 deadline to reach a deal to keep Chrysler out of bankruptcy. Under the plan, Chrysler aims for a "surgical" bankruptcy to wipe out a portion of its debts, allowing the creation of a new company tied to Fiat.
Lawyers backing the deal said there was no time to lose if the Detroit giant is to survive.
"The most important uncontroverted fact established by this records that Chrysler is a wasting asset. Every day, we're talking about hundreds of millions of dollars," warned Chrysler bankruptcy attorney Corinne Ball.
Fiat lawyer Hydee Feldstein said the deal would create "a phoenix rising from the ashes."
But Thomas Lauria, an attorney representing the group of dissenting lenders, countered that "not one witness has testified that the procedures are reasonable."
The group had asked Gonzales to keep their identities secret, saying they faced "threats" to their safety. However, Gonzalez turned down the application and ordered the creditors to reveal their identies by midday (1600 GMT) Wednesday.
The new firm would be majority owned by the United Auto Workers (UAW) union, with small stakes by the US and Canadian governments, which would contribute some 10.5 billion dollars to the venture.
Fiat would initially take a 20 percent stake in the firm that would rise to 35 percent and could reach 51 percent as early as 2013 if Chrysler is able to repay its government loans.