Chrysler Bankruptcy: Central Wrap-Up

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.

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