Chrysler decision delayed until Monday

It will now be at least June 1 before Chrysler learns whether Judge Arthur Gonzalez will okay the alliance with Fiat and a speedy exit from bankruptcy.

The decision, originally expected last Wednesday, has been delayed by the more than 300 objections filed by various groups opposing the plan, including some of the Chrysler dealers whose franchises were terminated and a group of Indiana pension funds. By Friday, most of the objections had either been resolved or withdrawn and the dealers and Indiana stakeholder remained the only primary obstacles. At the hearing on Friday, Judge Gonzalez said he will issue an opinion on the sale “sometime Monday.”

Experts believe the objections currently being raised are not intended so much to delay the decision of the bankruptcy court, which is expected to approve the government-backed plan, as they are to provide ammunition for a possible appeal. Motions filed in the U.S. District Court by Glenn Kurtz and Tom Lauria of Case & White, LLP, the attorneys for the Indiana pension funds, have already been denied by that court. Kurtz is trying to make the case that the Treasury is in violation of the U.S. Constitution and the terms of the Troubled Assets Relief Program (TARP), assertions that attorneys for the government say have no merit.

The proceedings are operating under a deadline. If the alliance between Chrysler and Fiat is not approved by June 15, Fiat is freed of its obligations to pursue the matter and can walk away. As there have been no other bidders for the Chrysler assets, the result would likely be a liquidation of the company’s assets in a bankruptcy auction.

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