Judge clears Chrysler Fiat tie up

June 2, 2009

, NEW YORK, June 2 – A bankruptcy judge has cleared the tie-up of Chrysler and Italy\’s Fiat for Thursday pending any delay from an appeals court, court documents showed on Tuesday.

Judge Arthur Gonzalez, in an order approving the Chrysler reorganization, agreed to allow the planned tie-up with Fiat to be completed Thursday at 1300 GMT.

The judge said he agreed to the accelerated plan in view of arguments from an adviser to the White House auto task force that the automaker is losing 100 million dollars for each day the plan is delayed.

Gonzalez waived the traditional 10-day stay, or delay, for the plan to be implemented.

"Any request to further modify the stay should be made to the appellate court," he said.

Fiat has said it could walk away from the tie-up with Chrysler if a deal is not finalized before June 15.

In an opinion issued late Sunday, the same judge approved the sale of the distressed US automaker to Fiat, saying this was the only way to save the company and paving the way for its rebirth.

He further added that despite extensive efforts over the last two years to seek various alliances for Chrysler, the Fiat transaction was "the only option that is currently viable."

The third-biggest US automaker has declared bankruptcy and is seeking a tie-up with Fiat backed by US and Canadian government financing in a plan presented as the only way to save the company from liquidation.

Lawyers for state pension funds in Indiana filed an appeal Monday against the sale of Chrysler.

The funds are the main objectors to the sale, which was approved by a US bankruptcy court in New York hours earlier, and is designed to rescue Chrysler from almost certain liquidation.

Objectors argued the sale was rushed through and failed to adequately compensate debt holders. The Indiana funds in particular were not satisfied with a US government offer of 29 cents on the dollar to holders of Chrysler debt.

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