Under questioning by the dealers' lawyers, Rattner testified that the Obama administration's task force had doubts that Chrysler could be a viable company without a "more rational" dealer footprint, and acknowledged that it required a smaller retail network as a condition of additional government financing to keep Chrysler afloat through a Chapter 11 reorganization.
But he emphasized that it was Chrysler's decision whether to accept the government's financing offer and go through the bankruptcy on those terms.
"Chrysler always had all the choices as to what it did," Rattner testified.
Rattner said it was up to Chrysler to determine "whether to accept that money and file for bankruptcy," adding: "They had every choice not to and go in a different direction."
Whether that ultimatum amounted to a form of government coercion is the critical issue before the Court of Federal Claims, where dealers are seeking compensation for their lost franchises in a suit filed nine years ago. The trial began April 8, and Rattner is among some 40 witnesses who are expected to testify.
Leonard Bellavia, an attorney representing the dealers, believes Rattner's testimony helped the dealers make their case that the government forced Chrysler's hand.
"I think he proved the plaintiffs' case nicely in that, he pretty clearly and unequivocally, demonstrated that it was the government that was driving the bus here," Bellavia told Automotive News last week after Rattner's testimony. "And that although Chrysler had to capitulate — because they had a gun to their head — at the 11th hour, no one can credibly say that Chrysler was willingly a bankruptcy filer. They did so at the mandate of the government, so the government could effectuate the closure of the 789 dealers."