AUBURN HILLS, Mich. — Chrysler LLC
prevailed in a federal bankruptcy court decision last week, allowing
the OEM to discontinue franchise agreements with 789 dealers across the
U.S. and complete an alliance with Italian automaker Fiat SpA.
The decision was handed down by U.S. Bankruptcy Judge Arthur Gonzalez,
who was apparently unmoved by dealers who argued that they needed more
time to wind down their new-car operations and sell off inventory.
"[The decision was] an exercise of sound business judgment by
[Chrysler] made in good faith and for legitimate commercial reasons,"
Gonzalez wrote.
The affected dealers, who represent nearly 25 percent of the OEM's
roster, were ordered to no longer display Chrysler signage or sell
vehicles under manufacturer warranty or incentive programs. Unsold
inventory can be redistributed by Chrysler under the terms of a program
announced last month and extended through June 15.
Emergence from bankruptcy allowed Chrysler and Fiat to sign an
agreement that will form a new company called Chrysler Group LLC. Fiat
now holds a 20 percent ownership stake; that number can increase if the
company reaches certain benchmarks or elects to buy a majority share
once certain federal loans are repaid.
"I am pleased to report that we have closed the alliance agreement
between Chrysler Group LLC and Fiat SpA and have emerged from
bankruptcy in record time," former Chrysler chairman and CEO Robert
Nardelli wrote in a farewell letter. "Chrysler Group now is a leaner,
healthier and more robust company ready to compete in the challenging
economy as an important player in the global automotive industry."
Chairman Robert Kidder and Chrysler Group and Fiat CEO Sergio
Marchionne will lead the new company. After reopening shuttered plants,
their next task will be to find ways to marry the Italian company's
small-car platforms and fuel-efficient technologies with Chrysler,
Dodge and Jeep designs. Chrysler Group LLC will also operate a parts
division under the established Mopar brand.
