On May 5, 2009, Chrysler LLC received court approval to proceed with proposed bidding procedures regarding its announced restructuring and strategic alliance with Fiat. Jones Day is acting as Chrysler's restructuring counsel.
After a seven-hour hearing, Judge Arthur J. Gonzalez, a federal bankruptcy judge in New York, set May 27 as the date of the final sale hearing. Any bids competing with the Fiat alliance plan must be submitted by May 20.
Under the Fiat alliance plan, Chrysler and its subsidiaries would sell substantially all of their assets and transfer certain of their liabilities to a newly formed entity. That entity, New Chrysler, would initially be 20 percent owned by Fiat, which would have the right eventually to increase its ownership interest to 51 percent or more. At the outset, a majority of the New Chrysler equity would be owned by a VEBA (Voluntary Employee Beneficiary Association) for members of the United Auto Workers, and minority interests would be owned by the United States and Canadian governments.
Judge Gonzalez approved a $4.1 billion "debtor-in-possession" financing facility being provided by the U.S. Department of the Treasury. Funds from that facility will support the operations of Chrysler and help sustain its supplier and dealer networks during its Chapter 11 bankruptcy proceeding.
The expedited sale procedure is designed to meet the objective of a "quick" and "efficient" bankruptcy process announced by President Obama on April 30. Chrysler's Chapter 11 bankruptcy petition was filed the same day and definitive documents have been executed by Chrysler, Fiat, and other participating parties.
The Jones Day team representing Chrysler in the bankruptcy proceedings is being led by partners Corinne Ball and Tim Cullen.