2.99 See Answer

Question: Following months in which Chrysler experienced


Following months in which Chrysler experienced deepening losses and received billions in bailout funds from the federal government, the company, now referred to as Old Chrysler, filed a bankruptcy petition under Chapter 11. The filing unsuccessfully sought additional government bailout funds for a restructuring, but the bankruptcy court ultimately settled on a transaction in which most of Old Chrysler’s operating assets would be transferred to New Chrysler in exchange for $2 billion in cash and other consideration. In addition, Fiat, another automobile manufacturer, agreed to provide New Chrysler with certain fuel-efficient vehicle platforms, access to its worldwide distribution system, and new management that was experienced in turning around a failing auto company. Financing for the sale would come from the U.S. Troubled asset Relief Program (TARP) and from Export Development Canada. The United Auto Workers union, the U.S. Treasury, and Export Development Canada would own the New Chrysler. Fiat, for its contributions, would immediately own 20 percent of the equity with rights to acquire more. Numerous groups appealed, seeking to stop the Chapter 11 bankruptcy from proceeding. Does it seem likely that the appeals court will support the settlement reached in the bankruptcy court? [In Re: Chrysler LLC, et al., U.S. Second Circuit, Docket No. 09-2311-bk (New York)]
Principle of Law:
Decision:

2.99

See Answer