Ron Kolka The Chrysler chief financial officer has warned that Fiat will pull out of the deal if it’s not done by June 15. - AP

Judge will rule on Chrysler sale by Monday

NEW YORK — A bankruptcy judge said Friday he will rule by Monday on whether Chrysler LLC can go forward with its plan sell most of the company to a group headed by Italy's Fiat and take a big step toward its goal of a speedy exit from Chapter 11.

U.S. Judge Arthur Gonzalez's ruling will likely come on the same day that fellow U.S.-based automaker General Motors Corp. is expected to follow in Chrysler's footsteps and file for bankruptcy protection.

The judge's Friday evening announcement came after 11 hours of testimony and arguments Friday that followed marathon sessions the two previous days, during which everyone from the automaker's outgoing chief executive to dealers slated to lose their franchises took the stand.

Gonzalez widely is expected to approve the sale, but it's likely attorneys for three Indiana state pension and construction funds, which have aggressively opposed the deal, will appeal the decision and possibly force Chrysler to further postpone the deal's closing.

Chrysler claims that any substantial delay could push Fiat to back out of the deal, since the Italian automaker has set a deadline of June 15 to wrap up a transaction.

If the sale goes through, Chrysler could emerge from Chapter 11 bankruptcy protection within weeks, defying observers who said that the company could linger under court oversight for years. Chrysler filed for Chapter 11 on April 30.

The Indiana funds are fighting the sale, saying that as secured lenders they shouldn't be forced to take such a large loss on their investment. The funds hold $42.5 million, or about 1 percent, of Chrysler's total $6.9 billion in secured debt. They bought the debt in July 2008 for 43 cents on the dollar.

Share This Story