On the same day that General Motors filed for bankruptcy protection, cross-town rival Chrysler took what may be its most significant step toward emerging from bankruptcy. The Washington Post reports, "A federal bankruptcy judge approved the sale of most of Chrysler LLC's assets to Italy's Fiat, moving the American automaker a step closer to its goal of a quick exit from court protection." A federal judge rules "that a speedy sale - the centerpiece of a restructuring plan backed by President Barack Obama's automotive task force - was needed to keep the value of Chrysler from deteriorating and would provide a better return for the company's stakeholders than if it had chosen to liquidate."
The New York Times explains, "With the approval, a newly reorganized Chrysler could come out of bankruptcy as early as this week, about a month after seeking protection, an extraordinarily short amount of time for a reorganization." The new company "will have a new ownership structure, with a union retiree trust owning 55 percent, Fiat holding a 20 percent share that could eventually grow to 35 percent, and the United States and Canadian governments owning minority stakes." A new board will guide the company, while a drastically-reduced dealership network may enable it to compete more effectively.
The Wall Street Journal reports, "Fiat SpA Chief Executive Sergio Marchionne is set to become the chief executive at Chrysler LLC" after the ruling.
Chrysler's journey through bankruptcy, Reuters reports, "has been widely seen as a test run for the much bigger and more complex reorganization of GM." However, unlike GM, Chrysler has not used the bankruptcy process to eliminate any of the auto brands it sells in the U.S., and has no significant overseas operations to restructure.