Chrysler seeks to close Fiat deal Thursday

New York -- Chrysler LLC has asked the federal bankruptcy judge overseeing its case to close the deal Thursday to sell its bankrupt assets to a new automaker in partnership with Fiat SpA.

That request would waive the 10-day waiting period usually in place after asset sale approvals are made and it would help ensure that the new company, Chrysler Group LLC, can begin operations possibly as early as this week.

The request, however, could be held up by a group of Indiana pensioners who have appealed Judge Arthur Gonzalez's decision. The secured creditors argue their claims were put behind those of unsecured creditors and they want the case heard by a district court judge.

The closing is critical because Fiat can walk away if it is not complete by June 15, which would force Chrysler to liquidate.

Chrysler spokeswoman Shawn Morgan said a hearing has been requested for Wednesday to deal with the closing date. That also is the day Gonzalez will hear objections from dealers whose franchise agreements are being terminated.

If the deal closes Thursday or soon thereafter, the new company will be able to restart production of Chrysler, Jeep, Dodge and, eventually, Fiat vehicles.

And the new small cars eventually could be built in Sterling Heights. State and local officials are working on a proposal to entice Fiat to occupy Chrysler's Sterling Heights Assembly Plant that is slated to close by December 2010.

The Michigan Economic Development Corp.is teaming with the Center for Automotive Research, the city of Sterling Heights and Gov. Jennifer Granholm's office to offer incentives for Fiat to occupy the plant on 15 Mile and Van Dyke for its car assembly, Sterling Heights Mayor Richard Notti said.

The proposal is expected to be presented by the end of June, he said.

Notte said he hopes Fiat will accept the proposal because the impact will be felt countywide by residents, suppliers and businesses near the Chrysler facilities. The economic impact for Sterling Heights is around $2 billion and the city would lose about $1.2 million in tax revenue each year if the proposal is rejected and the facility stands vacant.

When Fiat officially takes over, it will implement its practices for everything from purchasing to vehicle development to manufacturing practices and Fiat CEO Sergio Marchionne will become Chrysler's CEO. Duracell executive Robert Kidder takes over as chairman. The man who held both positions, Robert Nardelli, is stepping down when the sale is final.

The outgoing Nardelli on Monday was upbeat about the sale in a letter he sent to employees announcing the news.

"The new company will be a vibrant and competitive auto company," he said.

The ruling "should allow Chrysler to move forward," said John McEleney, chairman of the National Automobile Dealers Association.

"It restores a sense of certainty about Chrysler's future, which, in turn, helps restore some stability to the entire auto industry," he said.

apriddle@detnews.com">apriddle@detnews.com (313) 222-2504 Christina Stolarz and Christine Ferretti contributed.