Supreme Court extends hold on Chrysler sale
WASHINGTON — The Supreme Court on Monday delayed the sale of most of Chrysler’s assets to Fiat pending further consideration of an appeal by three Indiana state funds and several consumer groups, a move that injects a new element of uncertainty over the carmaker’s fate.
Justice Ruth Bader Ginsburg, who handles emergency matters arising from the 2nd U.S. Circuit Court of Appeals, said in a one-sentence order that the rulings of the bankruptcy judge allowing the sale "are stayed pending further order of the undersigned or of the court."
The order is in effect a holding action that gives Ginsburg or the full court more time to consider whether to delay the deal while parties objecting to it file appeals. The most likely explanation for the temporary stay is that the justices needed more time to consider the filings, which started arriving over the weekend.
Chrysler LLC, Fiat and the government were prepared to close the deal as soon as Monday night if the court let the deal go forward, according to people briefed on the matter. Lawyers for the carmakers and the government have said that speed was of the essence to ensure the companies’ survival and preserve thousands of jobs.
Under the terms of the deal, Fiat can walk away as soon as June 15, a move that Chrysler executives warned would mean near-certain liquidation. Executives testified in court that despite spending more than a year scouring the globe for someone to buy the company, none except Fiat made an offer. And a lawyer for Chrysler argued in a recent court filing that the carmaker was losing $100 million a day while in bankruptcy.
Chrysler halted production at its factories in the United States after it sought bankruptcy protection on April 30 florida health insurance. The company said it would restart the plants, including a truck assembly plant in Fenton, once the sale of its assets to Fiat was finalized. The Fenton plant is scheduled for permanent closure by the end of September as part of the bankruptcy. Another Chrysler plant in Fenton that made minivans was shuttered in October and will not be restarted.
For much of its court case, decisions had fallen Chrysler’s way. The carmaker won quick approval of its sale from two lower courts, and many legal experts said they did not expect the Supreme Court to further delay the deal.
But lawyers for the objectors, including Indiana funds representing teachers and police officers and several groups with product liability claims, filed their appeal to Ginsburg late Saturday night, after the 2nd Circuit reaffirmed a lower court’s approval of the sale. The appeals court had delayed the closing of the deal until Monday afternoon or until the Supreme Court declined to issue its own delay.
The Indiana funds have sought greater compensation for their portion of Chrysler’s $6.9 billion in secured debt. They have also argued that the Obama administration illegally used federal bailout money earmarked for financial institutions to help Chrysler. The Indiana funds bought their holdings in July 2008 for 43 cents on the dollar.
Lawyers for the funds have questioned whether Chrysler could have received a better deal than the Fiat transaction or through a liquidation. They have also objected on constitutional grounds, saying that the Obama administration was not allowed to give bailout money meant for financial institutions to Chrysler.