Chrysler: "An Indirect Wholly-owned Subsidiary of Fiat"

by Robert Farago

Published: May 1st, 2009

chrysler an indirect wholly owned subsidiary of fiat

We have a new sub-series to our new series: the Toxicroach papers. Turns out our longtime member of the TTAC’s Best and Brightest is a bankruptcy lawyer with access to the Chrysler C11 filing. He’s going to present these documents for our edification with some “what’s it all about, Tony?” analysis. We begin with a motion from Chrysler ( download pdf here) to do what they should have done a decade or more ago: consolidate.

Check this out—the last half is mostly about them consolidating the 25 cases into one for the sake of efficiency, but the first half lays out in pretty decent detail exactly what the plan is.

10. As the culmination of these efforts, Chrysler, Fiat and New Chrysler (as defined below) have reached an agreement in principle and are expected to entered into a Master Transaction Agreement (collectively with other ancillary and supporting documents, the “Purchase Agreement”) in short order.

Pursuant to the Purchase Agreement, among other things: NYI-4177690v8 -11- (a) Chrysler will transfer the majority of its operating assets to New CarCo Acquisition LLC (“New Chrysler”), a newly established Delaware limited liability company that currently is an indirect wholly-owned subsidiary of Fiat; and (b) in exchange for those assets, New Chrysler will assume certain liabilities of Chrysler and pay to Chrysler $2 billion in cash (collectively with the other transactions contemplated by the Purchase Agreement, the “Fiat Transaction”).

11. With the support of the U.S. government, Fiat, the UAW, dealers, suppliers and other stakeholders, the Debtors commenced these cases to implement an expeditious sale process to implement the Fiat Transaction, or a similar transaction with a competing bidder, designed to maximize the value of the Debtors’ operations and businesses for the benefit of their stakeholders. Pending the proposed sale, the Debtors will idle most operations as they conserve their resources, while at the same time ensuring that (a) the facilities are prepared to resume normal production schedules quickly upon the completion of a sale and (b) consumers are not impacted by the filing.

Robert Farago

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Robsaw on May 01, 2009

"a newly established Delaware limited liability company that currently is an indirect wholly-owned subsidiary of Fiat…" This article only contains one part of the plan, and has apparently mislead some of you. Fiat does not ever have majority control of Chrysler's assets except in the most transitory way. Another petition filed in the court contains this, which aligns with all public announcements about the deal. "Prior to the "Closing Date", (a) Fiat will contribute to New Chrysler access to competitive fuel-efficient vehicle platforms, certain technology, distribution capabilities in key growth markets and substantial cost saving opportunities; and (b) New Chrysler will issue approximately 55%, 8% and 2% of the Membership Interests in New Chrysler to a new VEBA, the U.S. Treasury and the Canadian government, respectively."

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The FIAT Guy on May 03, 2009

FIAT cars are, in fact, excellent. I’ve spent a lot of time in Europe, and know, have owned, and rented FIAT and Alfa Romeo cars. The technology and quality is very good, the style is fantastic, and If you thought having more small cars in America will be a boring hell, then you’ve never driven a FIAT. Forget what your college roomate told you in 1974, most of the problems arose from US safety and emissions regs, dealer issues in the US, and Russian steel which the company unfortunately obtained in a deal for a factory there. I myself had a 1978 FIAT 131 sedan that was the most enjoyable economy car you could imagine… still on the road 30 years later, too. Any portrayal of FIAT as a producer of antiquidated junk is just nonsense from the uninformed… and they make midsized cars, trucks, and commercial vehicles too- not just little 500s. IMO, they are going to surprise a whole lot of people. http://fiat2america.blogspot.com/

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