Chrysler LLC bankruptcy

Chrysler LLC and twenty-four of its affiliated subsidiaries filed a consolidated petition for bankruptcy on April 30, 2009, with the federal bankruptcy court in New York. The court filing occurred upon failure of the company to come to agreement with its creditors for an outside-of-bankruptcy restructuring plan, by the April 30 deadline mandated by the federal government.

At the time, Chrysler was controlled by the private investment company Cerberus Capital Management which, along with other investors, purchased a majority stake in 2007.

On Sunday, May 31, 2009, bankruptcy judge Arthur J. Gonzalez approved a proposed government restructuring plan and sale of Chrysler's assets. The sale allows most of the assets of Chrysler to be purchased by a new entity in which Fiat would own 20%, and the autoworker's union retirement health care trust (voluntary benefit association "VEBA") 55%, with the U.S. and Canadian government as minority stakeholders. Secured bondholders would receive 29 cents on the dollar for their claims. The sale was appealed to the New York circuit court, which affirmed the sale on June 5, 2009. The dissident Indiana pension plan bondholders appealed again to the U.S. Supreme Court to block the sale. The U.S. 2nd circuit appeals court stayed its decision, pending a response from the Supreme Court, until 4 pm, June 8, 2009.

On June 8, 2009, Supreme Court Associate Justice Ruth Bader Ginsburg, who handles emergency motions arising from the United States Appeals Court for the Second Circuit, in a one-sentence order, temporarily stayed the orders of the bankruptcy judge allowing the sale, pending further order by Justice Ginsburg or the Supreme Court.

On June 9, 2009, the Supreme Court published its denial of the applications for a stay of the sale from the three Indiana funds, allowing the sale of assets to "New Chrysler" to proceed.

According to the two-page decision and order, the Indiana funds "have not carried the burden" of demonstrating that the Supreme Court needed to intervene. The U.S. Department of the Treasury issued a statement saying: "We are gratified that not a single court that reviewed this matter, including the U.S. Supreme, found any fault whatsoever with the handling of this matter by either Chrysler or the U.S. government." The proposed sale of assets is scheduled to close on June 10, 2009, when the money to finance the deal is wired by the government. Fiat will receive equity in the New Chrysler through its contribution of automobile platforms as a base for a new line of Chrysler cars.

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Wikipedia