Chrysler Chapter 11 reorganization

Chrysler LLC and twenty-four of its affiliated subsidiaries filed a consolidated petition for bankruptcy on April 30, 2009, with the federal bankruptcy court in New York. The court filing occurred upon failure of the company to come to agreement with its creditors for an outside-of-bankruptcy restructuring plan, by the April 30 deadline mandated by the federal government.

At the time, Chrysler was controlled by the private investment company Cerberus Capital Management which, along with other investors, purchased a majority stake in 2007.

Initial court proceedings

On Sunday, May 31, 2009, bankruptcy judge Arthur J. Gonzalez approved a proposed government restructuring plan and sale of Chrysler's assets. The sale allows most of the assets of Chrysler to be purchased by a new entity in which Fiat would own 20%, and the autoworker's union retirement health care trust (voluntary benefit association "VEBA") 55%, with the U.S. and Canadian government as minority stakeholders. Secured bondholders would receive 29 cents on the dollar for their claims. The sale was appealed to the New York circuit court, which affirmed the sale on June 5, 2009. The dissident Indiana pension plan bondholders appealed again to the U.S. Supreme Court to block the sale. The U.S. 2nd circuit appeals court stayed its decision, pending a response from the Supreme Court, until 4 pm, June 8, 2009.