Chrysler creditor protection goes to court
Last Updated: Friday, May 1, 2009 | 6:56 PM ET
The Associated Press
Lawyers for Chrysler LLC said the company will file a motion by Saturday morning to sell substantially all of its assets to Italian automaker Fiat Group SpA, but that won't include eight plants, including five that the automaker revealed it will shutter by the end of next year.
While Chrysler faced its first hearing Friday in Manhattan bankruptcy court, court documents showed the ailing automaker plans to close five more plants in Michigan, Missouri, Ohio and Wisconsin that employ about 4,800 people. Chrysler said they will be offered jobs at other plants.
Two of the other plants that won't be part of the revamped company were already closed last year, and the other was already slated to be replaced by a new factory.
The eight plants would be left out of a deal for Italy's Fiat to buy the U.S. carmaker's most valuable assets in bankruptcy. Instead, the "new Chrysler" would lease the plants, then shutter them by December 2010.
"While some facilities may close, substantially all Chrysler employees will be offered employment with the new company," Chrysler spokeswoman Dianna Gutierrez said. "Employees currently located at a facility identified for disposition will be offered a position at one of the facilities sold to the new company."
A series of motions approved at Friday's short hearing launched a chain of events designed to ensure that Chrysler's bankruptcy process is the quick and "surgical" one the company and the U.S. government have promised.
Another hearing was scheduled for Monday morning, where Chrysler lawyers will ask Judge Arthur Gonzalez to let the ailing automaker start using $4.5 billion US in loans from the Treasury Department to keep operating under bankruptcy protection.
Chrysler lawyer Corinne Ball, of the firm Jones Day, said the $4.5 billion in loans and the sale to Fiat represent "an important lifeline" for Chrysler's dealers, supplies and customers.
"We have to move at a good speed throughout this proceeding," she told Gonzalez.
Meanwhile, Chrysler said Friday that its president and vice-chairman, Tom LaSorda, was leaving the automaker immediately.
The company didn't name a successor.
LaSorda, 54, joined Chrysler in 2000 and was the company's top manufacturing executive.
Chrysler CEO Robert Nardelli has said he will step down when Chrysler's bankruptcy is complete, which is expected to take up to 60 days.
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