On Tuesday, May 5, federal bankruptcy judge Arthur J. Gonzalez approved the proposed bidding procedures that will likely clear the way for Fiat's purchase of most of Chrysler LLC.
The decision ran counter to the desires of a group of hold-out creditors who believe liquidating the company would return more value. The creditors, mainly investment firms, hold approximately $300 million of Chrysler's $6.9 billion of unsecured debt.
An executive with the Capstone Advisory Group, Robert Manzo, who has been advising Chrysler, testified that an analysis conducted in January and updated with Chrysler's current cash levels indicated that, if liquidated, Chrysler would command little if any serious money.
Judge Gonzales, apparently agreed, ruling that, "The court concludes that the proposed bidding procedures are appropriate and necessary." Additionally, Judge Gonzalez ordered the disclosure of the creditors' identities by Wednesday, May 6 in spite of their claims that doing so could lead to public retaliation.
By the terms of a plan worked out with the Obama administration, a new entity composed of the United Automobile Workers Union, Fiat, and the United States and Canadian governments will purchase the majority of Chrysler's assets.
The company's lead lawyer, Corinne Ball, said of the proposal, "It's not perfect, and no one is saying it is perfect. But we believe we're doing what is appropriate and necessary."