Chrysler CEO: Sale likely to close today

Chrysler CEO Robert Nardelli said he expects the sale of the bulk of Chrysler's assets to a group headed by Italy's Fiat Group SpA to close today, assuming the judge overseeing the automaker's bankruptcy protection case approves the deal.

Nardelli testified in court yesterday that he expects the required U.S. regulatory approvals for the sale to be in place by today and international approvals to follow shortly thereafter.

But it's likely that if U.S. Judge Arthur Gonzalez does approve the deal, attorneys representing three Indiana state pension and construction funds, which hold Chrysler debt and are aggressively opposing the sale, will appeal the decision and force the company to postpone the closing. Fiat could back out if the deal doesn't wrap up by June 15.

Chrysler began its second day of testimony to convince Gonzalez that selling itself to Fiat was the best way to avoid liquidation. Attorneys for Chrysler say a leaner company could shift more easily to building smaller, more fuel-efficient cars.

But many Chrysler dealers, bondholders and former employees say they are being steamrolled by the exceptionally speedy bankruptcy court proceedings.

If the judge approves the sale, as expected, the automaker could emerge from Chapter 11 bankruptcy protection within weeks, defying observers who said that the company could linger under court oversight for years. Chrysler filed for Chapter 11 bankruptcy protection April 30.

In his testimony yesterday, Nardelli described the events leading up to Chrysler's bankruptcy filing. He said the company attempted to cut costs and restructure itself throughout 2008, but a steep drop in vehicle sales and tight credit proved to be too much, sending the industry into a "death spiral" by summer.

"The bottom fell out," he said.

Nardelli said he favored a plan for a stand-alone company and was disappointed when the government's auto task force gave him to the end of April to join with another automaker if it wanted the government's financial help.

In the end, Nardelli said, Chrysler officials couldn't justify liquidating the company instead of restructuring, given the number of jobs that would have been lost and communities that would be effected.

"I think it would have had a cataclysmic effect on the industry and the overall economy," he said.