Fiat says that Chrysler sale will go ahead

ITALIAN carmaker Fiat said yesterday it would proceed with its Chrysler deal, even after the supreme court delayed the sale of the US car giant&rsquo;s assets. <br /><br />The US administration haswarned that Fiat could renege on its deal to buy 35 per cent of the carmaker if the deal is not closed by mid-June.<br /><br />Richard Mourdock, the treasurer of Indiana &ndash; a Chrysler investor &ndash; is appealing the asset sale, saying the current restructuring plans favour the workers&rsquo; union. <br /><br />The sale of Chrysler to Fiat was approved by the New York bankruptcy court handling the Chapter 11 restructuring last month.<br /><br />As the deal stands, the Italian carmaker will share its ownership of the restructured Chrysler with unsecured creditor the United Auto Workers (UAW) union, which will get 55 per cent. The US and Canadian governments will share 10 per cent ownership.<br /><br />Chrysler&rsquo;s lenders will see returns of just $2bn (&pound;1.24bn), despite the company owing them $6.9bn.<br /><br />Meanwhile, Chrysler was last night expected to gain approval to trim its dealer network by a quarter, although opponents want any order delayed until the supreme court rules on the sale of the company.<br /><br />Chrysler asked the judge overseeing its bankruptcy to allow it to reject dealership agreements with 789 companies selling Dodge, Jeep and Chrysler vehicles.<br /><br />Chrysler, which applied for Chapter 11 bankruptcy protection on April 30, must sell off its assets to successfully emerge from bankruptcy. <br /><br />Lawyers for the car giant attempted to ease the blow of lost business for dealers across the US. <br /><br />They told the judge they would give affected dealers until Monday to shift some unsold cars to stores remaining with the Fiat-led automaker. About 98 per cent of the vehicles at rejected dealers that will be saved by the new Fiat-led Chrysler.