Chrysler announced last night that 24 per cent of its almost 3,200 dealers won’t be part of the new company when the core business is transferred to a new entity initially owned 20 percent by Italy’s Fiat SpA.
The 789 dealers who lost out were responsible for 14 per cent of Chrysler’s sales. The company said it would work with them to redistribute their new cars and parts to the remaining dealers.
According to the company’s statement, the dealers whose franchises are being rejected in bankruptcy will stop selling Chrysler cars about June 9th.
Fiat will make the final determination on which dealers will be dropped and which will continue selling Chrysler products.
At a hearing yesterday, a group of salaried retirees came up short on their request for the immediate appointment of their own official committee. For now, Fiat intends to continue health-care benefits for salaried retirees.
The retirees may have their committee later, the judge said.
Chrysler also prevailed over a group of dissatisfied utilities when the bankruptcy judge temporarily extended the company’s proposal to provide security for payment of utility bills.
Another hearing with the utilities will be held May 28th. Chrysler filed papers for permission to terminate leases for two private jet aircraft, a Gulfstream 450 and a Gulfstream 550. If the bankruptcy judge gives permission at a May 29th hearing, the owner will get provisional authority to draw down $8.9 million in security deposits.
The “new” Chrysler is to be 55 per cent owned by a trust to provide health-care benefits for retirees, 8 per cent by the US government and 2 per cent by the Canadian government.
The pivotal hearing for approval of the transfer to the new entity is set for May 27th. Objections are due by May 19th.
Bloomberg