Delays in Chrysler’s bankruptcy proceeding led to fears that key models like the 2011 Jeep Grand Cherokee may be delayedEnlarge Photo
The Supreme Court has approved the sale of substantially all of Chrysler's assets to Fiat, helping to finalize their alliance
as well as the American automaker’s bankruptcy proceedings
. Approval was given for the $2 billion sale of the assets to a new company that will be 68% controlled by a healthcare trust aligned with the United Auto Workers (UAW) union. Fiat will control 20%, while the U.S. and Canadian governments will control the remaining 12%.
Objectors to the deal had included a group of Indiana pension funds holding secured debt, some of the 789 dealerships Chrysler plans to reject, and consumer groups. They had argued that Chrysler was moving too quickly, that the sale violated bankruptcy principals and that the company was needlessly closing hundreds of its dealerships.
The Supreme Court rejected their challenge, stating that the objectors "have not carried the burden" to justify such action and that the court's action was not a decision on the merits of the underlying legal issues alone. The only alternative to approving the sale would have been the immediate liquidation of the automaker, reports Automotive News
Chrysler, as well as the Obama administration, urged the Supreme Court to allow the sale to go forward and said a long delay could either kill the deal or worsen its chances of viability, potentially jeopardizing more than 38,000 jobs.
In the lead up to its bankruptcy, Chrysler was forced to close all of its plants and leave thousands of vehicles, engines and components unfinished. This led to the fears that important model launches, like the redesigned Jeep Grand Cherokee
and next-generation Chrysler 300
, could be delayed.
The sale of Chrysler’s assets to the newly established Chrysler Group is expected to take place by June 15, a date that couldn’t come sooner as it’s estimated that the delays are costing Chrysler upwards of $100 million a day.