Supreme Court delays Chrysler's sale to Fiat

[Justin Bimmer]

http://news.yahoo.com/s/ap/20090608/ap_on_..._court_chrysler

WASHINGTON – Supreme Court Justice Ruth Bader Ginsburg on Monday delayed Chrysler's sale of most of its assets to a group led by Italy's Fiat, but didn't say how long the deal will remain on hold.

Ginsburg said in an order that the sale is "stayed pending further order," indicating that the delay may only be temporary.

Chrysler LLC has said the sale must close by June 15, or Fiat Group SpA has the option to walk away, leaving the Auburn Hills, Mich., automaker with little option but to liquidate.

A federal appeals court in New York approved the sale Friday but gave opponents until 4 p.m. EDT Monday to try to get the Supreme Court to intervene. Ginsburg issued her order right before the deadline.

Ginsburg could decide on her own whether to end the delay, or she could ask the full court to decide. It is unclear when she or the court will act.

Chrysler said it had no comment until it receives further information from the court.

Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from Chapter 11 bankruptcy protection.

But a trio of Indiana state pension and construction funds, which hold a small part of Chrysler's debt, have been fighting the sale, claiming that it unfairly favors Chrysler's unsecured stakeholders ahead of secured debtholders like themselves.

As part of Chrysler's restructuring plan, the automaker's secured debtholders will receive $2 billion, or about 29 cents on the dollar, for their combined $6.9 billion in debt. The Indiana funds bought their $42.5 million in debt in July 2008 for 43 cents on the dollar.

The funds also are challenging the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program to supply Chrysler's bankruptcy protection financing. They say the government did so without congressional authority.

Consumer groups and individuals with product-related lawsuits also are contesting a condition of the Chrysler sale that would release the company from product liability claims related to vehicles it sold before the "New Chrysler" partnered with Fiat is created.

Individuals with claims against "Old Chrysler" would have to seek compensation from the parts of the company not being sold to Fiat. But those assets have limited value and it's doubtful that there will be anything available to pay consumer claims.

The appeals come as Congress intensifies its scrutiny of the Obama administration's government-led restructuring of Chrysler and General Motors Corp. The Senate Banking Committee said it planned to call Ron Bloom, a senior adviser to the auto task force, and Edward Montgomery, who serves as the Obama administration's director of recovery for auto communities and workers, to a hearing Wednesday.

Sen. Christopher Dodd, D-Conn., the committee's chairman, planned to review the use of TARP funds to help the auto companies and look at whether taxpayers will receive a return on their investment.

GM and Chrysler executives faced questions last week from Congress over the elimination of hundreds of dealerships as part of the companies' reorganizations.

[Camino LS6]

What a mess!

[A Horse With No Name]

The courts will eff this thing up until its beyond redemption and nobody wins anything.

Better order your Challenger NOW, not in September...

Chris

[regfootball]

it was inevitable something like this would happen. better chrysler first than GM.

[Justin Bimmer]

It seems to me like GM has been negotiating out of court for this reason. To try and prevent something like this from springing up.

[Camino LS6]

The courts will eff this thing up until its beyond redemption and nobody wins anything.

Better order your Challenger NOW, not in September...

Chris

I'll just have to see what's left among the ruins for the 2011 or 2012 model year.

I won't be a player until then, I think

[A Horse With No Name]

I'll just have to see what's left among the ruins for the 2011 or 2012 model year.

I won't be a player until then, I think

Didn't Nostradomas or someone think the world would end in 2012?

Hope Chryco is still around in 2012...

Chris

[gmcbob]

Didn't Nostradomas or someone think the world would end in 2012?

Hope Chryco is still around in 2012...

Chris

On that note, I hope we're all still around in 2012!

[Robert Hall]

Didn't Nostradomas or someone think the world would end in 2012?

Hope Chryco is still around in 2012...

Chris

Well, the Mayan calendar ends in 2012. Roland Emmerich (Independence Day, Day After Tommorow) is coming out w/ an apocolytic film called 2012.

And I'll be 42 in 2012, and isn't 42 the Answer to Everything in Life according to Douglas Adams? Hmm.....time to stock up on ramen noodles, I guess...

[gmcbob]

I actually did watch some crazy show on the History Channel not too long ago on how the Mayan calendar basically predicted that the world was either going to drastically change or come to end in December of 2012.

Quasi interesting but silly.

This whole thing with the Supreme Court putting a stay on the Chrysler/Fiat dealer is kind of wild. I'm on the edge of my seat. I tend to be a bit of a pessimist, so that part of me is saying that it's over for Chrysler now. But, I also have this feeling that the SC won't let Chrysler completely liquidate.

[Robert Hall]

I actually did watch some crazy show on the History Channel not too long ago on how the Mayan calendar basically predicted that the world was either going to drastically change or come to end in December of 2012.

Quasi interesting but silly.

This whole thing with the Supreme Court putting a stay on the Chrysler/Fiat dealer is kind of wild. I'm on the edge of my seat. I tend to be a bit of a pessimist, so that part of me is saying that it's over for Chrysler now. But, I also have this feeling that the SC won't let Chrysler completely liquidate.

Strange times we live in.

This whole situation is one that calls for this emoticon:

Rob

[BuddyP]

I actually did watch some crazy show on the History Channel not too long ago on how the Mayan calendar basically predicted that the world was either going to drastically change or come to end in December of 2012.

Quasi interesting but silly.

This whole thing with the Supreme Court putting a stay on the Chrysler/Fiat dealer is kind of wild. I'm on the edge of my seat. I tend to be a bit of a pessimist, so that part of me is saying that it's over for Chrysler now. But, I also have this feeling that the SC won't let Chrysler completely liquidate.

Yeah Yeah, Dec. 21st 2012. It's not so much that the world is going to end (per the mayan calander), just that the calander stops on that date. Another 2 years people are going to get so worked up over nothing that that in itself is going to damage mankind.

As far as this Chrystler thing, I'm glad this appeal took place. There is no reason that this bankruptcy should go any differently than any other.

Edited June 9, 2009 by BuddyP

[ZL-1]

and isn't 42 the Answer to Everything in Life according to Douglas Adams?

He's wrong. the answer to everything in Life is, obviously, BOOBS!!!!!!!!!

Re the Justice's ruling, let the Supreme Court follow its procedure. Those pension funds did what they thought was best in protecting their interests.

Edited June 9, 2009 by ZL-1

[Drew Dowdell]

Yeah Yeah, Dec. 21st 2012. It's not so much that the world is going to end (per the mayan calander), just that the calander stops on that date. Another 2 years people are going to get so worked up over nothing that that in itself is going to damage mankind.

The Mayan calendar only stops on Dec 21st 2012 if you also believe the clocks stop at 12:00.

[Camino LS6]

My guess is that the court will refuse to hear the case - give it a few days and we'll see if I am right.

[ShadowDog]

As part of Chrysler's restructuring plan, the automaker's secured debtholders will receive $2 billion, or about 29 cents on the dollar, for their combined $6.9 billion in debt. The Indiana funds bought their $42.5 million in debt in July 2008 for 43 cents on the dollar.

It makes me wonder why some choose such high-risk investments in the first place. "Ooo, cheap cheap, buy buy!"