Sale of Chrysler Assets Delayed
By: Donna Ray Chmura. This was posted Monday, June 8th, 2009
This afternoon, the United States Supreme Court issued a stay of the sale to Fiat SpA of the assets of Chrysler LLC, currently attempting to exit bankruptcy proceedings so that it may proceed as a going concern in the global automotive industry.
Late last Saturday, a group of Indiana pension funds opposed to the sale of Chrysler to Italy’s Fiat filed an emergency motion with the U.S. Supreme Court, asking that the sale be “stayed” or put on hold while they continue their attempts to block it. The motion came after the Second Circuit on Friday upheld the Bankruptcy Court’s approval of the sale. The stay asks for the extension of a temporary hold put in place by the appeals court until Monday at 4 p.m. EDT or when the high court decides whether to intervene.
With the stay approved, the Chrysler deal with Fiat could be delayed for weeks or months. Fiat can pull out of the deal if it does not go through by June 15.
The pension funds contend that secured creditors would have fared better if Chrysler had sold its assets piecemeal instead of in bulk to the Fiat consortium. They also object to the sale because secured creditors are in a worse financial position than unsecured creditors as a result of the sale.
Justice Ruth Bader Ginsburg hears all emergency motions arising from the Second Circuit. She issued the one sentence ruling herself. She could have refered the motion to the entire court, rejected the appeal outright or requested other parties involved in the case file briefs.
Until the stay, the sale could have closed today.
A group of citizens with product liability claims against Chrysler filed a brief with Ginsburg early Sunday that supported the Indiana pensioners’ case. Consumers are concerned that “New Chrysler” is not assuming product liability claims for cars sold prior to the sale, and that “Old Chrysler” will not have enough assets to take care of these claims.
Tags: appeal, Chapter 11, Chrysler, Chrysler Bankruptcy, emergency stay, Indiana Pension Funds, Justice Ruth Bader Ginsberg, motion, Second District of New York, US Bankruptcy Court