Attorney who led the legal challenge to Chrysler-Fiat plan thinks courts let us down during perceived crisis. -- The passing of an American icon.
And I am not opposed to using Chapter 11 to shed unprofitable dealerships and the UAW contract, the latter being something that didn't really happen and with the UAW VEBA now owning 55% of the company. The UAW contract was renegotiated prior to the filing. And the result is that the stock ownership of the VEBA compared to the lenders who financed Chrysler (and but for this roughshod treatment here and with GM) probably won't in the future is crazy.
Chrysler's restructuring calls for the company to form an alliance with Fiat, the Italian auto maker. A UAW retiree health-care trust fund, the VEBA, will hold 55% of the new Chrysler's equity, and the U.S. and Canadian governments would hold small stakes. Fiat can build its initial stake to 35% through the introduction into the U.S. market of certain technologies, including a 40-miles-per-gallon engine by 2012.
Under an agreement with Chrysler, Fiat could have pulled out of the deal next Monday if it hadn't cleared the courts, though just as I wrote in prior posts that Fiat wasn't about to walk away from something being given to it, the Italian auto maker said Tuesday that it had no intention of abandoning the arrangement. Why should it -- Fiat is getting a 20% stake in an American icon without putting up any cash.
Sometimes the cure is worst than the disease.
But for the Fiat's involvement and the American courts ignoring established law, I would wish Chrysler well. But as noted in past posts, I don't feel good about this whole thing.
I don't feel the same way as after Lee Iacocca famously told us after the 1979 bailout: "If you can find a better car, buy it."
From The Wall Street Journal:
Thomas Lauria, a White & Case lawyer who led the legal challenge [to Chrysler's plan in Chapter 11], said his experiences in the past month "cause me to...directly raise the question as to whether our judiciary is today able to fulfill its constitutional mission, that is, to ensure that the rule of law prevails -- particularly in the face of perceived crisis."