When the U.S. Supreme Court delayed the sale of Chrysler to Fiat yesterday it put the whole contract in jeopardy, giving the Italian automaker the opportunity to walk away if the sale isn’t approved by June 15th. Fiat CEO Sergio Marchionne has, however, confirmed his commitment to the purchase, saying that it would not deter him.

“We would never walk away,” he said in an interview with Bloomberg. “Never.”

Late Monday afternoon Supreme Court Justice Ruth Bader Ginsburg delayed the sale but did not make clear the intentions of the court. A group of Indiana pension funds have attempted to block the sale of Chrysler to a Fiat-run group (also comprised of the U.S. and Canadian governments) by alleging that the initial bankruptcy court acted contrary to the law by putting the needs of unsecured lenders ahead of secured ones (some of which include the pension funds).

The bankruptcy court’s decision was upheld by an appeals court and now the matter may go before the Supreme Court.

It is not guaranteed that the Supreme Court will heard the case but that is the speculation.

All we do know is that Fiat has an unwavering interest in the Chrysler brand and the U.S. market. This is likely due to Marchionne’s belief that in a post-recession auto industry there will be far fewer major players controlling significantly larger shares of the market.

[Source: Automotive News]

A U.S. Supreme Court judge has delayed the sale of Chrysler to a new Fiat-run company. The move by Justice Ruth Bader Ginsburg came just before a 4 p.m. deadline set by a New York appeals court would have seen the sale completed.

The statement by Justice Ginsburg was just one sentence and gave no mention if or when the Supreme Court would hear an appeal by several Indiana pension funds which are challenging the sale.  Representatives of those pension funds have just lost an appeal and were said to be looking to take their challenge to the U.S. supreme court. The group is arguing that by permitting the sale of Chrysler to Fiat the bankruptcy court acted contrary to the law by putting unsecured lenders ahead of secured ones.

The Obama administration has pressured the Supreme Court against delaying the sale of Chrysler saying that such a move could have “grave consequences,” namely, the liquidation of Chrysler’s assets. If the sale of Chrysler to the Fiat-led group (which also includes the U.S. and Canadian governments) does not transpire by June 15, Fiat is able to walk away.

[Source: Automotive News]

Chrysler, the brand that carries the name of the corporation behind it, may not do so for long. According to a report on AdAge.com, Fiat executives are looking at if they should keep all three Chrysler brands (Chrysler, Dodge and Jeep) and the most likely candidate to get axed is Chrysler itself.

A spokesperson for Chrysler admitted she had also heard the rumors but could not confirm them.

Apparently this isn’t the first time the Chrysler brand has faced the chopping block as executives at the company debated cutting the brand earlier this year.

Over the past several years the Chrysler lineup has been diminished significantly with models like the Crossfire, PT Cruiser, Aspen and Pacifica all being cut.

With the exception of the Chrysler 300 (and possibly the Town & Country, the low volume sibling of the Caravan), there aren’t any Chrysler models that would be missed.

[Source: AdAge]

Those 789 Chrysler, Dodge and Jeep dealers that were cut loose by Chrysler as a part of its bankruptcy and restructuring plan have until June 9th (next Tuesday) to part with their remaining inventory.

Because of the dealership contract that they signed, dealers aren’t allowed to sell off the cars once the contract expires. And because Chrysler is in bankruptcy protection, it doesn’t have to buy the cars back either.

Chrysler has said that it will help the 789 dealers move their inventory to the remaining Chrysler dealerships, but it won’t give any guarantees on the amount of money those dealerships will have to pay for the remaining vehicles. And considering the circumstances, the terminated dealers don’t exactly have much faith in their parent company right now.

As a result, dealerships are slashing prices. CNN visited Pohanka Chrysler-Dodge in Leesburg, Virginia, where the dealership has slashed prices on some models by as much as 40 percent. A brand new Dodge Nitro, which lists for  $29,170 now has a sticker price of just $17,510.

Owner Ray O’Bryhim even says prices may get lower as the June 9th deadline approaches.

When Chrysler’s 789 dealers received noticication that their contracts would not be renewed, they had an inventory of roughly 44,000 cars.

Starting Monday, Chrysler will idle most of its plants as the company restructures under a Chapter 11 bankruptcy filing. This will include 8 U.S. assembly plants, as well as facilities in Canada and Mexico. Other pre-assembly facilities will also face temporary closure including five North American engine plants, six stamping plants and seven transmission plants.

The temporary shut-down will effect 26,000 UAW workers and 10,000 Canadian Auto Workers. 

Chrysler is using the bankruptcy proceedings to its advantage, as the production stoppage will allow it to deplete the ever-increasing stockpile of vehicles.

The temporary shut-down is expected to take from 30 to 60 days, however, there is potential for it to extend beyond that.

[Source: Automotive News]

President Obama is expected to announce tomorrow that Chrysler will in fact file for bankruptcy; according to a report by Bloomberg. The Wall Street Journal, however, says that Obama currently has two speeches drafted for tomorrow’s press conference: one if the struggling automaker files for Chapter 11, and one if it doesn’t.

The Chapter 11 option seems the most likely at this point as it would make the alliance with Fiat a smoother process.

The only way Chrysler will avoid the “B” word is if the companies that it is indebted to agree to accept a cash offer in exchange for that debt. That may sound like a more than fair trade, were it not for the fact that the cash value is just $2 billion, in exchange for $6.9 billion in debt.

While the federal government has made an agreement with the largest lender, other major players, including Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital are holding out. According to David Cole at The Center for Automotive Research in Ann Arbor, MI, if those lenders have insurance policies that cover them completely in the case that Chrysler fails, then it’s in their best interests to see that bankruptcy is the solution.

President Obama, speaking on the topic at a Town Hall meeting in St. Louis today said that if bankruptcy happens it will be “real quick.”

But with billions on the line and numerous big players involved it’s not clear how even the Federal Government could stop the restructuring of Chrysler from taking years in court.

The Washington Post has reported that a Chrysler/Fiat alliance would see Chrysler CEO Bob Nardelli ousted from his current position in favor of an executive from Fiat.

[Source: Automotive News]

Less than a day after the UAW, Chrysler and Fiat agreed upon the terms of a contract that would keep the struggling U.S. automaker afloat, details of the agreement have surfaced in which the union will take a controlling share in Chrysler.

At first it seemed almost too good to be true that all sides had reached an agreement without the need for decreased wages. Instead the agreement stipulated that Chrysler would significantly reduce its participation in the employee retirement program.

The agreement came just days after a similar agreement had been reach between Chrysler Canada and the Canadian Auto Workers union – an agreement that was ratified the same day Chrysler and the UAW put together the current proposal.

Now word has leaked that in exchange for Chrysler’s reduced payments to the company’s retirement plan, the company had to essentially hand itself over to the union. In total, the UAW will get a 55 percent stake in the planed Chrysler-Fiat partnership, with Fiat initially taking a 20 percent share, with up to 35 percent ownership possible if certain conditions are met. 

The agreement now has to go before Chrysler’s 26,000 workers, with voting on Wednesday in order to ratify the agreement ahead of the government’s end-of-month bankruptcy deadline. If the deal is reached and Fiat signs on, the Federal Treasury will provide Chrysler (or should we say the UAW) with $6 billion to keep the automaker afloat.

Meanwhile, one other major player (which has been incredibly quiet during this ordeal) has agreed to remove itself from the situation. Daimler will shed its 20 percent stake in Chrysler and rethink ever working with a U.S. automaker again.

[Source: Automotive News]

Fiat is about ready to walk away from a potential partnership with Chrysler says CEO Sergio Marchionne unless the U.S. automaker can significantly cut labor costs. While the United Auto Workers union has made it known that it is willing to work with Fiat and Chrysler management, the Canadian Auto Workers union isn’t.

“From what I can tell from a distance, the CAW may have taken more rigid positions,” said Marchionne in an interview with Canada’s Globe and Mail newspaper.

Currently Chrysler and the CAW do not see eye-to-eye. The automaker has asked the union to cut labor costs by $19 CDN to $55 to match hourly wages in U.S. plants but the CAW will only go as far as reducing hourly wages by $7.25 (an amount GM workers agreed to recently).

Marchionne did not mince words in his interview with the Globe saying that a sense of entitlement in an organization that is technically bankrupt was nonsense and that the involvement of the U.S. and Canadian governments in a bailout plan was a sign of last resort for Chrysler.

Marchionne said that there is currently only a 50 percent chance the deal could go through. Meanwhile Moody’s Corporate Finance recently said that Chrysler has a greater than 70 percent chance of going into bankruptcy.

Meanwhile the Obama administration’s April 30th deadline is fast approaching.

[Source: Globe and Mail]

Chrysler Canada Headquarters in Windsor, Ontario

While President Obama outlined his plan yesterday for General Motors and Chrysler, the Canadian government was forced into some more immediate action.

Chrysler Canada, which is currently threatening to remove all of it’s manufacturing facilities from the country if the Canadian Auto Workers (CAW) union cannot make concessions, made an emergency request to the Canadian government for an advancement on a government loan.

The Canadian government has agreed to loan Chrysler Canada $4 billion to help restructure the company if they meet certain requirements. One billion of that was set to be advanced, however, Chrysler Canada is in such dire straights that it made a request yesterday for a $250 million immediate advance, without which it could not make payroll.

“Very clearly, if the money had not been forwarded today, they would not have been able to meet payroll today or tomorrow,” said Industry Minister Tony Clement. Without the funds Chrysler Canada would have had to file for bankruptcy.

[Source: The Globe and Mail]

*** UPDATE *** Moments after Chrysler released an announcement that a partnership with Fiat was a done-deal, the American auto manufacturer released another statement with slightly revised wording stating that it had just a “framework” of a deal in place. *** UPDATE ***

Hours after President Barak Obama gave Chrysler a deadline of 30 days in which to solidify a partnership with Fiat, a deal has indeed been made.

“We are pleased that Chrysler, Fiat and Cerberus have reached agreement on a framework of a global alliance, supported by the U.S. Treasury,” said Chrysler Chairman and CEO Bob Nardelli in a press release issued by Chrysler. “Chrysler has consistently said that the alliance with Fiat enhances its business model that expands its global competitiveness. We appreciate the willingness of the Task Force, along with industry and financial experts, to consult closely with us in order to achieve this significant step”

The new partnership will see Fiat provide Chrysler with technology, products and several vehicle platforms for global distribution.

“Fiat strengthens Chrysler’s ability to create and preserve U.S. jobs; gives U.S. consumers more choices for environmentally advanced vehicles; gives its dealers more of the products they need to be successful; helps stabilize the supplier base; and allows Chrysler to pay back government loans sooner,” continued Nardelli.

“I want to personally assure all of our customers, dealers, suppliers and employees that Chrysler will operate ‘business as usual’ over the next 30 days. While we recognize that we still have substantial hurdles to resolve, Chrysler is committed to working closely with Fiat, the Administration, U.S. Treasury and the Task Force to secure the support of necessary stakeholders.”

The final details of the Chrysler and Fiat partnership (whether it be a merger or ownership) must still be worked out over the next 30 days, after which Chrysler is still seeking $6 billion to get the new Chrysler on its feet.