Chrysler will form new company with Fiat

Chrysler will sell its principal assets to a new company under Section 363 of the Bankruptcy Code. The new company will be the result of the alliance with Fiat and will have the Chrysler, Dodge and Jeep brands, as well as most of Chrysler’s current employees and production facilities. Chrysler’s current employees will become employees of the new company.

Chrysler will pay $2 billion to its secured creditors for the assets.

Section 363 allows assets to be sold quickly, so the “new” Chrysler should spend only about 60 days under court supervision.

The remaining assets will go through a traditional Chapter 11 process where they will be sold or liquidated.