Judge approves agreement for GMAC to become prefered Chrysler lender

Chrysler Notebook: Judge OKs deal with GMAC

NEW YORK — Developments from Tuesday’s Chrysler bankruptcy hearing:

THE ISSUE: Chrysler LLC asked U.S. Judge Arthur Gonzales to approve a deal that would allow GMAC Financial Services to become the automaker’s preferred lender, meaning it would have the right to supply showroom financing for Chrysler dealers and certain discount financing rates to the automaker’s customers.

THE ARGUMENTS: Chrysler argued that it needed the deal with GMAC, which currently provides financing for General Motors Corp. customers and dealers, because Chrysler Financial recently froze dealer financing. Without new financing, it’s unlikely that Chrysler’s dealers would be able to stay in business very long, the automaker said.

THE DECISION: Gonzales approved the pact with GMAC, as well as a risk-sharing agreement between Chrysler and Chrysler Financial that allows the deal to go forward. The specific terms of the agreement with GMAC were sealed by the court.

WHAT’S NEXT: At a hearing Thursday, Gonzales will consider whether to appoint an official committee of salaried retirees. The retirees are worried that their pensions won’t be protected once the sale of the bulk of Chrysler’s assets goes through.

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