A dissident group of Chrysler LLC lenders objected Tuesday to the sale of the bulk of the automaker's assets to Italian automaker Fiat, saying that the proposed sale process is designed to prevent competitive bidding.
In an objection filed Tuesday, the lenders group said the proposed sale's bidding procedures only give the appearance of legitimacy and don't maximize the sale price of the assets. Michigan's state attorney general also filed an objection over concerns that if the sale goes through the new company formed wouldn't meet obligations to a state workers' compensation fund.
Lawyers packed the hot and stuffy New York City courtroom for a third-straight business day of testimony in the case, which the Auburn Hills, Mich.-based automaker hopes will end in a swift exit from court oversight.
As the hearing stretched into the evening, Chrysler turnaround officials and executives testified about the events of the months leading up to the company's bankruptcy protection filing.
Scott Garberding, Chrysler's executive vice president for procurement, described efforts to form alliances with automakers other than Fiat, including General Motors Corp. and Russia's GAZ, in recent years.
In addition, Robert Manzo, an executive director with Capstone Advisory Group LLC and one of Chrysler's top restructuring advisers, described how the automaker found itself with few options in the month leading up to Chrysler's government-imposed April 30 restructuring deadline.
"Given the options available over the past 30 days and the lack of liquidity, we could choose a transaction along the lines of the Fiat deal with the help of the U.S. Treasury or face immediate liquidation," Manzo said.
Judge Arthur Gonzales was set to issue a decision on the bidding procedures later in Tuesday's hearing.
On Monday, the same group of lenders objected to a Chrysler motion to allow the company to access $4.5 billion in bankruptcy financing, saying that it was too closely tied to the proposed sale.
The group of holdout lenders had refused a deal that would amount to 29 cents on the dollar to dissolve what they're owed and go along with the government's restructuring plan for Chrysler. President Barack Obama said Thursday that the lenders were seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles, including the Fiat deal and a cost-cutting pact that the United Auto Workers ratified last week.
Early on in Tuesday's hearing, Gonzales ruled that the identities of the group's members do not need to be sealed, despite arguments from the group's lead attorney that death threats were made against some of them.
Thomas Lauria, an attorney for the lenders group, said the names should be sealed by the court because some of the members had received threats of violence after been singled out by President Obama as the cause of Chrysler's bankruptcy filing.
But Robert Hamilton, an attorney for Chrysler, said those threats only amounted to four or five "rants" on a newspaper Web site.
"Anyone who has an understanding of the kind of rants on these kinds of message boards would never take them seriously," Hamilton said.
Gonzales gave the lenders group until 10 a.m. Wednesday to file their list of members with the court.
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