US federal judge approves Chrysler decision
- Source: xinhua
- [09:07 June 10 2009]
- Comments
File photo taken on May 30, 2009 shows the exterior of Chrysler LLC in Michigan, the United States. The US Supreme Court decided to temporarily delay Chrysler's sale to Italian automker Fiat on June 8. Supreme Court Justice Ruth Bader Ginsburg said in an order that the sale is "stayed pending further order." (Xinhua/Gu Xinrong)
A federal bankruptcy judge in New York approved Tuesday Chrysler LLC's plan to immediately close 789 of its nearly 3,200 dealerships.
US Bankruptcy Judge Arthur Gonzalez made the decision after hearing about four hours of legal arguments Tuesday morning from the automaker, its committee of unsecured creditors and more than a dozen lawyers representing more than 300 objecting dealers that Chrysler wants to shutter Tuesday.
Gonzalez said it represented "an exercise of sound business judgment by (Chrysler), made in good faith and for legitimate commercial reasons and is appropriate and necessary."
The automaker said it would allow its closing dealers until June 15 to transfer their unsold inventory to other dealers.
Stephen Lerner, a lawyer for the dealers, told Gonzalez that Chrysler was acting in an "unconscionable" fashion and that the process had been "less than fair to dealers."
But closing dealers may be stuck with unsold parts and tools. After Tuesday, they will not be able to sell new Chrysler vehicles with warranties or be eligible for Chrysler sales incentives, moves that would make it effectively impossible to sell most vehicles.
Chrysler has said the dealers closing are under performing and account for just 14 percent of its annual retail sales.
It is reported that a House Energy and Commerce subcommittee is set to consider the issue of the closing GM and Chrysler dealers on Friday, with GM
CEO Fritz Henderson and Chrysler president James Press scheduled to testify, along with John McEleney, head of the National Automobile Dealers Association.
The Senate Commerce Committee held its own hearing on Wednesday on closing dealerships with the three same witnesses.