Chrysler inked a deal on Wednesday that gives Italian automaker Fiat Group control of its best assets, pulling the US icon out of bankruptcy less than two months after it sought court protection, according to dpa. Fiat's chief executive Sergio Marchionne will also become CEO of a new Chrysler company that has been formed - leaving its worst performing brands and dealers behind - while Robert Kidder will be named chairman. The formal agreement comes after the US Supreme Court on Tuesday night refused to hear an appeal by some of Chrysler's creditors who were trying to block the deal. Chrysler had hoped to emerge from bankruptcy in record time - 30 to 60 days - as part of White House-backed efforts to rescue it from the dual devastation of a deep recession and years of making inefficient cars that few wanted to buy. "This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," Marchionne said in a statement. The success of Chrysler, which filed for insolvency on April 30, offers hope for its larger US rival General Motors, which declared bankruptcy on June 1. But GM's situation is more complicated, and the White House hopes it can emerge from the process in two to three months. US President Barack Obama is hoping the twin bankruptcies will breathe new life into the country's flagging, Detroit-based car industry, which has steadily lost market share to foreign rivals over the past few decades. Fiat will start with a 20-per-cent share of the new Chrysler Group but could increase that stake to 35 per cent as it transfers over fuel-efficient technologies and meets other conditions of the agreement. "This has, I know, been a difficult process for everyone involved, but we are ready to prove to the American consumer that Chrysler can once again be a strong, competitive company," Marchionne said in a statement. A union health care trust will hold a majority stake of 55 per cent at the start. The US government will get 8 per cent and the Canadian government 2 per cent. But Fiat will have virtually full control over Chrysler, as both the government and the union will not take up day-to-day management roles. Of a new nine-member board of directors yet to be appointed, three will be named by Fiat, four by the US government, one by the Canadian government and one by the United Auto Workers union. The US car industry has been in turmoil since the US economy went into a sharp downward spiral in October. Domestic car sales have tumbled more than 35 per cent since that time. Both Chrysler and GM have taken billions of dollars in loans from the US and Canadian governments, which in turn have claimed equity stakes in both private firms. Fiat could eventually take a majority stake in Chrysler once the US government is no longer involved. The Chrysler deal cleared its final hurdle Tuesday night. The Supreme Court rejected a bid by creditors, led by a group of Indiana pension funds, to recover more money. Chrysler had offered its creditors 2 billion dollars in cash to forego about 7 billion dollars in debt. But some bondholders had believed they were getting a poor deal and hoped for liquidation. In a separate development Tuesday, a bankruptcy court in New York gave Chrysler permission to cancel 789 car dealership agreements, overruling objections from owners that they would be an asset to reorganizing the company. The Supreme Court said in its four paragraph order that the decision applied only to the Chrysler case. But it does signal that a similar restructuring effort by GM will not face much court resistance.
