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Chrysler Sale To Fiat Gives The Company A New Lease On Life

Due to today's sale to Fiat, Chrysler Corporation once again has a new lease on life. While the UAW, the American and Canadian governments will remain the main shareholders in Chrysler for at least some short term time, the new deal does put a company with a proven record in the auto business in the driver's seat at Chrysler. fiat_500 reborn.jpg

Without a true auto company such as Daimler in charge at Chrysler, the company suffered in many ways after the sale as a private company and without public stock offerings. But with a true auto brand in charge at Chrysler, there should be a number of existing Fiat models that might be quickly brought up to American safety and air pollution standards available for sale re-branded as Chrysler products within months. A new version of the Fiat 500 might even some appeal similar to the BMW revival of the Mini Cooper concept.

There will continue to be a system of checks and balances on the bankruptcy process though, where the old Chrysler will undoubtedly be brought into court many times by many parties who feel shortchanged. But since the Supreme Court cleared one major legal hurdle for Chrysler on Tuesday, at least one legal roadblock was removed. Conservative conspiracy theorists may continue to believe that the Obama Administration somehow overstepped the bounds of executive branch authority in it's handling of the Chrysler situation, however no court has proven that so far. And further, today more hearings will be held in front of Senate Banking Committee, chaired by Senator Christopher Dodd, in which the Obama Administration will have to continue to satisfy any concerns of the public, dealers or others concerned about the Chrysler matter.

In it's brief review statement by the U.S. Supreme Court, the Court ruled that the three pensions failed to present the "burden" of proof required to invalidate or holdup the sale, knocking down any claims that the sale was somehow not legal. A further legal blow came on Tuesday when U.S. bankruptcy Arthur Gonzales approved the termination of 789 Chrysler dealers, as the company seeks to consolidate down all dealers into handling all Chrysler products, including Jeep and Dodge.

The fact of the matter is that Chrysler is moving ahead with plans to survive as a company. And showrooms should begin to see some new Fiat products sometime in the near future as well. The road back for Chrysler still remains a difficult one. But at least Chrysler is moving forward. Right now all Chrysler production plants are closed due to the bankruptcy. But now they should shortly reopen providing work once again.


Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!

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Comments (4)

ke_future:

here is a good analysis of why you're a little ahead of yourself, paul. the underlying legal and constitutional issues were not decided by the SCOTUS denying a stay in the bankruptcy. in fact, the order explictly did not rule on the merits of the case at all.

http://www.scotusblog.com/wp/commentary-whats-next-on-bailout-law/#more-9848

in my opinion, the deal stinks. extra-legal actions were taken to make it happen. contracts were illegally ignored. no matter what you way, there is no way that i am going to like the way this deal happened.

John:

The deal does stink, and the ripple effect to those who may want to invest in car companies, creditors and buyers, will have yet to be seen.

Paul Hooson:

Hello Ke. I understand what you're saying here. I know that there are going to be unhappy parties as the old Chrysler goes through bankruptcy and a new company owned by Fiat emerges. I know the court didn't rule on all legal matters, but simply felt that the plaintiffs case didn't meet their evidence "burden" standards. I suppose the chapter 11 bankruptcy is enough to allow the old Chrysler to break previous contracts with some lower volume dealers, although many dealers feel this is wrong as well.

Back when I operated a smaller used TV business across the street from a huge new TV and appliance dealer they got themselves into trouble with GE and other creditors by ordering the equal of about 20,000 appliances on credit, but couldn't pay for them, and GE and other creditors forced them into a chapter 7 liquidation to at least get about 10cents on the dollar back. It wasn't a great deal for GE, but better than nothing. Bankruptcy is like that. No one leaves completely happy. But strangely if some person walked out the door of a store with a loaf of bread, it would be illegal, a crime called shoplifting, but for a business it is perfectly legal to order millions of dollars of goods on credit, not pay for them, and then declare bankruptcy so they don't have to pay. Such are some of the quirks of the American justice system.

Any business that I've owned, I've always either repaid my creditors or else returned their unsold stock if it sold poorly. Yet, I've seen plenty around me in business who have abused bankruptcy laws to their benefit. I know of one guy in the appliance business who declared bankruptcy, but moved a lot of assets to his son to protect his cash, then reopened a business of the same type as soon as it was legal for him to do so. I've always resented that as being little more than legalized theft in my view.

ke_future:

interesting stories paul, but i fail to see their relevance to the discussion at hand.

if you understand what i'm saying, then you understand that this is a corrupt deal. that secured creditors, including pensions funds for every day workers, got screwed by the adminstration. and that the union got a payoff for supporting obama.

I suppose the chapter 11 bankruptcy is enough to allow the old Chrysler to break previous contracts with some lower volume dealers, although many dealers feel this is wrong as well.

I still want to know the criteria for which dealers got their contracts terminated and a score of how the dealerships compared on that criteria. there have been too many questions raised, about this whole thing, for there not to be an accounting.

this whole thing stinks to high heaven.


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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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