Chrysler Financial, which provides financing to more than 60 percent of Chrysler dealers, almost entirely halted its lending after the automaker filed for bankruptcy protection on April 30. The freeze made it extremely difficult for dealers to obtain cars for their showrooms.
U.S. Bankruptcy Judge Arthur Gonzalez approved a motion by Chrysler requesting that GMAC, the former financing unit of General Motors Corp, be allowed to step in and provide wholesale, retail and other product-related financing for an initial four-year term.
The participants include GMAC, Chrysler and Chrysler Financial. Documents finalizing the details of the deal are expected to be filed with the court later on Tuesday and are subject to review.
There are about 3,200 Chrysler dealers, and between 60 percent and 70 percent used Chrysler Financial for financing, said Michael Keegan, Chrysler vice president for volume planning and sales operations, at the hearing.
Without the financing allowed by the judge, "the general dealer body would run through working capital immediately or within weeks," said Keegan.
The case is In re: Chrysler LLC, U.S. Bankruptcy Court, Southern District of New York, No. 09-50002.
