Chrysler’s troubles looked so great even its own executives thought the company was headed for liquidation, however emergency surgery in the bankruptcy courts appears to have saved the patient.

As Caroline Humer and Tom Hals write, the sale of Chrysler’s main business to Italy’s Fiat and other groups looks likely to be sealed by the end of May, taking most of the company out of bankruptcy within just 30 days, hitting the government’s target deadline.

Judge Arthur Gonzalez has been instrumental in driving through the process, quickly rejecting objections from a range of creditors. A few sticking points could still hold up the sale, with a group of Indiana pension funds filing suit in a separate court, but most specialists expect the judge to approve the sale to Fiat at Wednesday’s hearing.

The Fiat deal is an example of what is called a “363 sale” in the bankruptcy world, which is typically done in the first couple of months after a filing. In Chrysler’s case, the sale sped through quickly because Chrysler showed that the 30-day timeline was critical to saving the business. Read an earlier analysis by Caroline here.

Reuters’ Emily Chasan will be sending live updates from the Chrysler bankruptcy hearing, scheduled to begin at 11:00 am on Wednesday. Read her updates on DealZone or follow the DealZone Twitter account.

More:

• Chrysler creditor group asks court to appoint examiner
• Terminated Chrysler dealerships to challenge sale
• Chrysler seeks OK for Daimler, Cerberus settlement
• Full Coverage: The Auto Industry

In Detroit, it is a fact of life that you are what you drive.

GM and Chrysler have staked their future — and some $20 billion of taxpayer-backed loans — on the idea that they can reinvent themselves as lean, green and mean manufacturers of small and fuel-efficient cars and electric-drive vehicles.

That’s a vision that resonates with the Obama administration, which has announced an ambitious target of putting 1 million plug-in hybrid cars like the much-touted Chevy Volt on the road by 2010.

But some of Detroit’s highest-profile auto executives are still driving like its 1999. Their rides still harken back to the era when they were the kings of the road.

GM sales chief Mark LaNeve called in from the road on Friday to brief reporters on the automaker’s plans to cut dealerships.

LaNeve said he used OnStar’s hands-free dialing to join the conference call from the cockpit of a luxury Cadillac Escalade SUV.

“The Slade”, as it has become known, gets 12 miles per gallon in the city. Sales are down over 45 percent this year.

GM Chief Executive Fritz Henderson said this week that his family fleet includes a Saab 9-3 convertible for his wife, a Corvette, a Camaro and a Malibu, which his daughter drives.

Henderson’s “baby,” he said, was the Corvette, which first hit the streets more than half a century ago. The muscle car’s mileage? 16 miles per gallon city. Sales? Down 55 percent.

Across town, Chrysler Chief Executive Bob Nardelli was spotted being chauffeur-driven in a Chrysler 300 sedan to the automaker’s Auburn Hills headquarters from an upscale suburban Detroit hotel.

The car is a faded hit for Chrysler, known for it egg-crate grill, muscular styling and powerful engine. Not known so much for its green cred. City mileage? 19 miles per gallon.

Nardelli, who is expected to leave Chrysler in the next few weeks, should take note: President Obama sold his 300C with the 5.7-liter engine shortly after he began his run for the White House.

For weeks, General Motors has been working to prepare its customers, suppliers and employees for the hard landing most analysts see waiting at month end: a bankruptcy filing.

The embattled automaker’s drop dead date is Monday, June 1 when it has $1 billion in bond payments due that it plans to skip.  Five days earlier, on May 27, GM learns how much of some $27 billion in bonds it was able to retire in exchange for its devalued stock.

Analysts and restructuring experts see little chance GM will meet its target of wiping its balance sheet almost clean of bond debt. That would leave one option: a Chapter 11 filing.

There’s another reason that bankruptcy has now become all but certain in the view of most analysts: the drag of too many GM dealers competing against each other for the same shrinking pool of Chevy, Cadillac and Buick shoppers.

As expected, Chrysler LLC used  its bankruptcy ask a federal judge to cut it free of almost 25 percent of its U.S. dealerships. GM is expected to detail its own plans to eliminate about 2,600 dealerships as soon as this week.

Outside bankruptcy, industry executives say GM has no chance to tear up those contracts and walk away.

The backlash has already begun and seems certain to grow bigger.

Civil rights leader Jesse Jackson used an appearance at Ford’s annual meeting to announce that he has already lined up a protest intended to call attention to the economic fallout from a GM bankruptcy.

“If GM goes down, we are going to have a demonstration the first of June in Lansing, Michigan,” he said. “We are going to have mayors and auto workers and civil rights groups and others.”

“We must warn the American people if GM goes into  bankruptcy the impact will be devastating.”

Echoing a line of protest raised by the United Auto Workers, Jackson said he was worried about the loss of GM-related factory jobs and the possiblity of jobs shifting to China as imports increase.

“If they go down, whole cities and towns and state revenue budgets will go down with it,” he said.

It's a puzzle M&A bankers and corporate executives have been trying to solve for years: how far from your home market can an acquisition take place and ultimately stumble over cultural differences? It's a question that looms large as quintessentially Italian automaker Fiat prepares to swallow up Chrysler -- inventor of the K-car and the minivan -- and which reportedly haunts St Louis-based employees of Anheuser Busch in the aftermath of their company's takeover by the penny pinching Belgians and Brazilians at InBev.

Gary Katz, CEO of Deutsche Boerse unit International Securities Exchange, insisted during his appearance at the Reuters Exchanges and Trading Summit that all has been sweetness and light since the Germans assumed control of the upstart American options exchange and that there has been "nearly zero turnover" since the takeover.

But Thomas Kloet, Chief Executive of Canadian exchange powerhouse TMX, was one of several executives at the summit who insisted that cross border mergers can often be a recipe for disaster and that the ideal mergers are "domestic roll-ups" like CME Group's takeover of Nymex and the Chicago Board of Trade or indeed TSX Group's takeover of the Montreal Exchange, which created TMX.

Implicitly criticizing some of the first-ever cross border deals in the sector like NYSE's merger with Euronext, Kloet said: "there are significant regulatory differences that make cross border mergers pretty difficult to do, especially when they start passing over salt water, so to speak."

Listen to the attached recording to hear the former ABN AMRO senior managing director's ruminations on exchange M&A in full.

With GM’s share price heading toward $1 and Chrysler close to consummating its shot-gun wedding with Fiat, Ford’s raising $1.4 billion through the sale of 300 million shares puts some serious distance between it and the competition.

Having gone this far into the recession without government aid, Ford is making a big show of going green, consolidating its dealer networks and taking the kind of cost-cutting steps that GM is being chased into by the government and that Chrysler is hoping for from its merger with Italy’s Fiat.

If the restructuring moves weren’t enough, Ford chief Alan Mulally (smiling and clapping, left) made sure to hit the right PR notes when detailing how the fresh cash would be used: possibly funding a larger portion of Ford’s retiree obligations.

Given that GM’s latest do-or-die deadline with the Obama administration autos task force is just a couple weeks away, Ford’s going to market now serves more to separate it from its struggling rivals than to address any real funding needs. The company said just last week that its restructuring was on track and that it had sufficient liquidity to fund it, including converting plants and investing in future products.

It’s always wiser to approach the market from a position of strength, so while Ford may not appear to need the money right now, the sorry state of the competition may have made the opportunity too good to pass up.

Deals of the Day:

* Ticketmaster Entertainment said it received the required approval from its lenders for its proposed merger with Live Nation, the world’s largest concert promoter.

* Shinsei Bank and Aozora Bank could announce their plan to merge as early as Wednesday, sources said, a deal that would bring together two money-losing lenders and create Japan’s sixth-largest bank.

* Executives at Citigroup Primerica Financial Services unit are looking to sell the division’s marketing arm, Bloomberg said, citing four people familiar with the matter.

* Printing services provider R.R. Donnelley & Sons Co said it offered to buy the assets and properties of Quebecor World for about $1.35 billion in a cash and stock deal to expand into Canada.

* Mitsubishi UFJ Financial Group Inc’s trust banking unit has decided to cancel its planned $257 million purchase of Citigroup’s Japanese trust bank, Japanese newspapers reported.

(PHOTO: Ford Motor Co. President and CEO Alan Mulally addresses the crowd during a news conference in Wayne, Michigan May 6, 2009. REUTERS/Rebecca Cook)

Chrysler’s private equity owners Cerberus, or at least their lawyers, will arrive at bankruptcy court in Manhattan later this morning. Yesterday, President Obama assured hand-wringing industrialists that the process would be quick and efficient and that Chrysler would emerge a leaner, meaner machine.

To some degree, one can look at the U.S. airline industry in the same light. But that industry, while “saved” through bankruptcy numerous times, is today a shadow of its former self, and remains haunted every so often by the threat of a return to that business mortuary for rebirth.

But a lot has changed since the crisis mad bankruptcy court so busy. The key for the new age of court-run restructuring is to sell major assets before going to court — effectively leaving creditors to haggle over the dregs. Some disgruntled creditors contend that the quick bankruptcy promised by Obama is being engineered in such a way because the sales would never make it past a judge.

In the first major bankruptcy for the auto industry since the crisis began, Obama criticized a handful of “speculators” for greedily holding out for more taxpayer money. He praised union workers for making concessions and financial institutions, led by JPMorgan, for agreeing to take losses up front. He even praised the car company’s management.

But if you look closely, you may start to sympathize with anyone who bought a bond and is being told to settle for less to serve the common good. And to have the management of the company and its bankers praised for effectively engineering a lot of this mess might well make your eyes cross in disbelief.

Deals of the Day:

* Sumitomo Mitsui Financial Group, Japan’s third-largest bank, will buy Citigroup’s Japanese brokerage and key investment banking units in a $5.9 billion deal that will create a banking powerhouse.

* Citi execs are using the sale of its Japanese retail brokerage Nikko Cordial to ease demands from the U.S. stress tests on banks, arguing the sale of non-core assets such as Nikko would strengthen its balance sheet, the Financial Times reported, citing people close to the matter.

* General Motors will talk to the Korea Development Bank (KDB) about selling a stake in GM Daewoo, if that would help the South Korean car-making unit in the long term, a top executive said.

* Australia should veto China’s planned $19.5 billion investment in miner Rio Tinto, Australia’s main opposition Liberal Party said as political opposition to the deal continued to grow.

(PHOTO: The Chrysler logo is reflected in the rear view mirror of a vehicle on the lot at Clark Chrysler Jeep Dodge dealership in Methuen, Massachusetts April 30, 2009. )

Under the bondholders’ deal, they would swap a 51-percent stake in a restructured company for $27 billion in debt, a person with knowledge of the plan tells Reuters Detroit Bureau Chief Kevin Krolicki. The deal would give the United Auto Workers union 41-percent in a new General Motors while the U.S. government would not receive an equity stake, according to the person who asked not to be named because the offer had not yet been submitted.

A committee representing GM bondholders will present the alternative plan to the White House task force overseeing the restructuring of GM and Chrysler later today, the person said. GM said this week it was moving ahead with a plan to offer existing bondholders a 10-percent ownership of the restructured automaker. Under the GM plan, the US government would own a combined 89-percent of the new company.

GM Chief Executive Fritz Henderson said on Monday the automaker would file for bankruptcy if bondholders did not swap out of 90-percent of the $27 billion they are owed.

Deals of the day:

* There is “reasonable optimism” that a deal between Fiat and Chrysler could be announced on Thursday, Italy’s industry minister said after talking to Fiat’s top management.

* Korea Development Bank (KDB) is considering raising its stake in GM Daewoo, the South Korean unit of cash-strapped General Motors Corp, officials at the state-run bank said.

* U.S. investor J.C. Flowers is heading for a showdown with the German government by refusing to accept its tender offer for stricken Hypo Real Estate.

* Russian fixed-line operator Comstar has offered to acquire telecom company Synterra for $850 million in equity and cash, including debt, business daily Kommersant reported.

* Credit Suisse will sell a 30 percent stake in an asset management joint venture formed with Woori Finance Holdings back to the South Korean firm, both companies said.

* Anheuser-Busch InBev said it completed the sale of its minority stake in Tsingtao to ASAHI for $667 million.

* Deutsche Telekom plans to combine its German fixed-line and wireless units into a single division to help save costs, it said.

(PHOTO: A General Motors Pontiac sign is seen at an auto dealership in Dearborn, Michigan April 24, 2009. REUTERS/Rebecca Cook)

Chrysler’s biggest lenders and the U.S. government reached a breakthrough framework deal to cut the automaker’s debt by $6.9 billion, but officials say bankruptcy is still a strong possibility with the Obama administration’s Thursday deadline for a comprehensive rescue plan just hours away.

Fiat Chief Executive Sergio Marchionne was quoted by the president of the Canadian Auto Workers union as saying Chrysler would likely enter Chapter 11 bankruptcy for a period of time. But Michigan Senator Carl Levin said, “If they do go into bankruptcy, it would really be in and out.” A source with senior-level knowledge of the restructuring told us that a surgical bankruptcy could be a way, for instance, to address “recalcitrant” lenders.

With Germany’s Daimler AG dumping its 19.9 percent stake in Chrysler and Italy’s Fiat poised to “eventually” own more than a third of the company, European know-how and innovation have never been more important for the U.S. auto industry.

Deals of the Day:

* British education and training company BPP Holdings said it had received a preliminary approach from Apollo Global at 620 pence per share in cash. The approach was at a 70 percent premium to BPP’s closing price on Tuesday valued BPP at 303.5 million pounds ($447 million).

* Australian iron ore miner Fortescue Metals has completed approvals for its equity tie-up with China’s Hunan Valin Iron and Steel Group, the company said.

* Russia’s Aeroflot may agree to buy 49 percent of troubled German airline Blue Wings, Russian Transport Minister Igor Levitin, who is also Aeroflot’s chairman, told Reuters.

* A merger between Shinsei Bank and Aozora Bank is facing difficulties as they were not able to get consent from their major shareholders, Jiji news agency reported. 

(PHOTO: A Chrysler logo is seen atop a New York City car dealership April 27, 2009. REUTERS/Mike Segar)

With just days left to complete deals to slash labor and debt costs or face bankruptcy, Chrysler has won union concessions aimed at paving the way for a deal with Fiat and the U.S. government to save the privately held automaker. The UAW said that deal must be ratified by Wednesday and meets conditions mandated by the Treasury as part of an emergency loan program for Chrysler. Treasury’s deadline is Thursday.

“The patience, resolve and determination of UAW members in these difficult times is extraordinary, and has made it possible for us to reach the agreement we will present to our membership,” UAW President Ron Gettelfinger said in a statement. The UAW represents about 26,800 Chrysler workers in the United States. The company also has a contract buyout offer on the table for those workers, which expires today. GM is expected to announce a fresh round of cost cutting later this morning.

The U.S. Treasury was expected to make a new debt restructuring offer to Chrysler’s lenders, who are owed $6.9 billion, as soon as today. Attention has shifted back to creditors. Whether they will show patience, resolve and determination remains a question.  Whether doing so will produce a deal is an even bigger one.

Deals of the Day:

* American International Group has received second-round bids from three groups for its aircraft leasing business, valuing the unit at under $5 billion, a source familiar with the matter said.

* Shares of Japan’s Shinsei Bank and Aozora Bank soared after sources said the two money-losing lenders were in merger talks to form Japan’s sixth-largest bank.

* Japanese brewer Kirin agreed a $2.5 billion buy-out of Lion Nathan, Australia’s second-largest beer maker, in a move that could pave way for Kirin to expand further into Asian markets.

* Japan’s Mitsubishi Rayon said it aims to complete its buyout of unlisted British chemicals maker Lucite International by the end of May, saying antitrust authorities worldwide had given the deal the go-ahead.

* HSBC Private Equity and Actis Capital LLP are preparing rival bids for a stake in Franklin Offshore International, sources said, as struggling private equity firm 3i Group Plc seeks to sell its majority stake in the oil services company.

* Poland’s largest bank PKO BP may sell its minority stake in Bank Pocztowy as the state treasury fears a conflict of interest between the two, daily newspaper Gazeta Prawna quoted a state official as saying.

* Anheuser-Busch InBev has picked private equity firm Kohlberg Kravis Roberts & Co (KKR) [KKR.UL] as preferred buyer of South Korea’s Oriental Brewery (OB), a company official said, confirming a report.

* Japan’s NEC Electronics and Renesas Technology said they were in talks to merge next year to create the world’s third-biggest chipmaker after Intel Corp and Samsung Electronics.

(PHOTO: Fiat workers assemble cars at an automobile factory in the southern Italian town of Pomigliano January 30, 2009. REUTERS/Stefano Renna/Agnfoto)