DETROIT -- Chrysler LLC will use Section 363 of the federal bankruptcy code to sell its principal assets to a new company resulting from Chryslers alliance with Fiat.
In a statement today, Chrysler said the move should allow a leaner new company to emerge in a matter of 30 to 60 days, well-positioned for long-term viability.
The new company will have all three Chrysler brands, as well as most of its current factories and employees, company and government statements said.
Chrysler today said that it and Fiat had agreed in principle on the alliance, and that Chrysler will enter Chapter 11 reorganization to form the new company.
Under Section 363, assets can be sold quickly -- avoiding the typical Chapter 11 reorganization process, which can take several years.
Chryslers statement did not specify which assets will go into the new company. But in the statement, CEO Bob Nardelli said the new Chrysler will continue to sell vehicles under the Jeep, Dodge and Chrysler brands, as well as parts under the Mopar brand.
Chrysler employees will become employees of the new company, Nardelli said. Chrysler dealerships remain open for business serving our customers. All vehicle warranties will be honored without interruption, and consumers can continue to purchase our vehicles with complete confidence.
A White House statement issued today said assets will be transferred in exchange for a $2 billion payment to Chryslers secured lenders. The statement said the Fiat-Chrysler alliance will retain Chryslers existing factory footprint and continue producing Chrysler cars in U.S. factories.
In a letter to employees, Nardelli said the substantial majority of Chrysler's assets, operations, plants and people will be transferred to the new company.
Assets and liabilities remaining with the old company will proceed through a Chapter 11 process, during which these assets may be sold or otherwise liquidated, the letter said.
Chrysler is in the process of identifying and finalizing the list of assets that will be disposed of through this process, Nardellis letter said. Once this is complete and we are asked to share it with the court, we also will share it with you.