DETROIT (Reuters) - Chrysler has asked the U.S. Bankruptcy Court for a swift hearing into its planned sale to Italy’s Fiat SpA, a proposal that brought immediate objections on Monday from some secured lenders.
Chrysler filed for bankruptcy on Thursday, planning an emergence from court protection in as little as 30 days under the guidance of Obama administration officials.
The automaker asked Judge Arthur Gonzalez to set a hearing as soon as May 21 to approve a $2 billion sale of most of its assets out of bankruptcy that would clear the way for a merger with Fiat, according to documents filed with the court.
Fiat would start with a 20 percent stake in the new Chrysler, which would grow quickly to 35 percent. Fiat Chief Executive Sergio Marchionne is expected to run the merged operations.
Chrysler also asked the Bankruptcy Court to approve a $35 million breakup fee for Fiat if the sale falls apart.
The U.S. automaker, which has been operating with $4 billion of emergency U.S. government loans, failed to reach a deal with all of its secured first-lien lenders last week to restructure its debt, forcing Chrysler into the courts.
The first-lien lenders were owed a collective $6.9 billion, and four large banks led by JPMorgan that controlled about 70 percent of the debt had approved a plan to take $2 billion cash.
A group of investment funds led by Oppenheimer Funds and Stairway Capital had objected to the payout terms as unfair and filed an immediate objection on Monday asking Gonzalez to block the Fiat deal and the U.S. government’s offer to provide bankruptcy financing to Chrysler.
The dissenting secured lenders said in their objection that the sale was being “orchestrated entirely by Treasury and foisted upon the debtors without regard to corporate formalities.”
The case is in re Chrysler LLC, U.S. Bankruptcy Court, Southern District of New York, No. 09-50002.