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Updated 5-7-09
End game
Court papers are available at Chrysler¹s site, chryslerRestructuring.com. The
bankruptcy court judge, Arthur Gonzalez, has approved payments to employees
and dealers, incentive payments, and honoring of warranties.
On May 5, 2009, Judge Gonzalez gave potential bidders until May 20, with a
hearing for approval of bids on May 27. Anyone can bid on Chrysler; if a bid
deemed more attractive than that of the Treasury, the judge can choose it.
That means that someone like Bill Gates, Steve Feinberg, China, or Dubai
could buy Chrysler, or a consortium could buy parts of it and break it up.
The bankruptcy is expected to be over in May or June. At that time Chrysler
will be 20% owned by Fiat, 55% by an employee retirement plan, 8% by the U.S.
Treasury, 2% by the Canadian government. The CEO is expected to be Sergio
Marcchione, currently CEO of Fiat.
Fiat¹s newly formed auto group will include Chrysler, Fiat, Lancia, Alfa
Romeo, and, if current negotiations pan out, GM Europe (including Saab) and
GM Latin America. That would make it the world¹s second largest automaker
after Toyota ‹ and, one would suspect, very hard to manage. GM¹s size is one
of the factors that has been blamed for its losses; the larger an
organization is, the harder it is to manage (which is why Johnson & Johnson
is a collection of companies rather than one monolithic organization).
The new Chrysler will be managed by a board of directors consisting of nine
directors, three of which will be appointed by Fiat (one of Fiat¹s must
satisfy the criteria for independence under the New York Stock Exchange
listing rules). VEBA and the Government of Canada will each appoint one
Director, and the U.S. Treasury will have the right to make the initial
appointment of four directors (three of whom must be independent). VEBA is
expected to sell its 55% share, not necessarily all at once, but the UAW has
already announced it has no interest in maintaining the holdings.