NEW YORK (Reuters) -- Fiat S.p.A. said in court papers on Friday that it is "already concerned" about the "deteriorating value" of the assets of alliance partner Chrysler LLC and that a U.S. district court should not obstruct its sale process.
Chrysler, its creditors' committee, and Fiat filed a series of court documents on Friday, asking the U.S. District Court in Manhattan to reject a request by a group of Indiana state pension funds that the district court intervene in the bankruptcy case and postpone the sale of Chrysler's assets.
"Any material delay in the implementation of the bidding and sales process that the Bankruptcy Court has carefully but expeditiously set in motion will destroy Chrysler, put hundreds of thousands of people out of work, and devastate communities in both the United States and Canada," Chrysler said in court documents.
Chrysler has a government deadline of June 15 to close the transaction to sell itself to a "New Chrysler" owned by the U.S. and Canadian governments, Chrysler's union and Fiat, according to court papers. Chrysler's unsecured creditors' committee said in court papers on Friday that if the sale was not able to go forward it would mean certain liquidation for the automaker.
Chrysler's factories have been shut during its Chapter 11 bankruptcy reorganization.
Dangers of delay
Fiat, however, said that any delay to the sale process "could ultimately prove fatal" to Fiat's plan to revive Chrysler. It said it already has concerns about the value of the assets "New Chrysler" is expected to acquire from "Old Chrysler" as the company's plant shutdown is affecting its suppliers and dealer networks.
Chrysler and Fiat said that if the district court decides to grant the Indiana pension funds' request, the funds should be required to put up a substantial bond to compensate parties harmed by that delay. Chrysler asked that the funds put up a $2 billion bond.
According to court papers, the Indiana pension funds hold about $43 million of Chrysler's total $6.9 billion in senior debt. The pension funds have said they object to the way Chrysler is planning to sell itself and distribute funds to more junior creditors ahead of them. They say that the government does not have the authority to take these actions and asked that the sale be delayed so constitutional questions about the government's involvement can be explored. The district court is slated to hear the pension funds' request on Tuesday. Chrysler is scheduled to have its sale hearing in bankruptcy court on Wednesday.