Chrysler seeking quick fix for bankruptcy

Bankrupt automaker asks judge to set May 21 for hearing on asset sales. Dissident creditors express concern about process.

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By Aaron Smith, CNNMoney.com staff writer

How strong are the nation's 19 largest financial institutions?
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NEW YORK (CNNMoney.com) -- Chrysler LLC is seeking a quick resolution to its bankruptcy filing so it can move ahead with its merger.

The automaker, in documents filed Monday to federal bankruptcy court in New York, requested that Judge Arthur Gonzalez set a May 21 hearing to proceed with the sales of its assets. The company wants to sell off $2 billion worth of assets so it can clear the way for its merger with Fiat.

For Chrysler, time is of the essence. The company said Monday that it expects to lose $4.7 billion this year, according to filed documents. The company expects to burn through $15.7 billion in the restructuring process. President Obama wants the process completed in as little as 30 days.

Chrysler's assets were a point of contention in Monday's bankruptcy court hearings. A lawyer representing some of Chrysler's lenders said they are worried about getting their money back, as well as an angry backlash from opponents of their anti-TARP stance.

Thomas Lauria, an attorney with White & Case, said during proceedings in Chrysler's Chapter 11 bankruptcy case that some of his clients had received "death threats that they perceive as being bona fide" for opposing the federal lending.

Lauria named one of the lenders as OppenheimerFunds, but declined to identify others.

"They would be putting themselves in harm's way by disclosing their locations," said Lauria, speaking before Judge Arthur Gonzalez in federal Bankruptcy Court in Manhattan.

Chrysler is trying to shed $6.9 billion in debt through the bankruptcy process. The automaker had tried to forge a deal with the Treasury Department to convert the debt into $2 billion in cash for its creditors, including finance firms such as JPMorgan Chase.

But some hedge fund firms holding a minority stake in the debt opposed the process, and Chrysler filed for Chapter 11 bankruptcy.

Oppenheimer , in a statement to CNNMoney.com, said the deal "unfairly asked our fund shareholders to make financial sacrifices greater than the sacrifices being made by unsecured creditors."

Lauria said his clients were concerned about the value of Chrysler's assets declining during the bankruptcy process.

When Gonzalez said he didn't understand "how particularly you're being harmed," Lauria said he was worried about a Chrysler fire sale knocking the assets down to "liquidation value," diminishing the $2 billion settlement further.

Despite his concerns, Lauria said he didn't want to block Chrysler's reconstruction.

"We're in a terrible spot, Your Honor," said Lauria. "We don't want to block the rehabilitation of Chrysler. We shouldn't be coerced through this process to contribute more to the effort than we've committed to voluntarily."

Corinne Ball of law firm Jones Day, one of the lead groups representing Chrysler, said that Lauria was unfairly presenting the automaker.

"The suggestion by Mr. Lauria that we're trying to spend more than what we have is not what we're seeking to do," said Ball.

In this second day of court proceedings, Ball continued to emphasize the importance of keeping Chrysler's supporting businesses -- particularly its dealers -- intact throughout the bankruptcy process.

The court proceedings continue Tuesday.

Reuters contributed to this report. To top of page

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