Supreme Court Stays Chrysler-Fiat Deal

[jake75]

June 8, 2009: "WASHINGTON (MarketWatch) -- The U.S. Supreme Court blocked the sale of Chrysler's assets after a group of Indiana pension funds appealed the sale. The funds argued that the sale of Chrysler to Italian automaker Fiat is unconstitutional. A court spokesman said that the sale is stayed "pending further order of the court."I am guessing that at least two of the Justices have owned a Fiat.

[ColonelPanic]

I'm still trying to figure out how Indiana pension funds got mixed in with Chrysler! But I'm certainly not in the know about all the places money goes. So, either my state is going to end up ruining the company, or maybe doing them a favor. Who knows.

[jimincalif]

Indiana's fund purchased some senior Chrysler debt last year. Because it was senior debt, it is supposed to have priority over other claims in any sort of bankruptcy proceedings. The administration is trying to alter this priority. Good for Indiana to take this to the Supremes. If Indiana loses, all companies, but especially unionized companies, will have to pay higher interest rates to borrow money because lenders will no longer be able to rely on the law to enforce their claims, thereby increasing their risk.This is an exceedingly important case for the long term recovery of our economy and the rule of law. The most successful economies in the world owe their success to secure property rights and the rule of law. It is really difficult to overstate the significance of this, if politicians can override the rule of law, we will start circling the drain.

[jake75]

From a news article - While dealers cope with major changes, Chrysler is trying to emerge from bankruptcy. That path got more complicated yesterday when Justice Ginsberg delayed the sale of most of Chrysler's assets to a group led by Fiat.She gave no indication of how long the case would be frozen or whether all the justices would hear the case. That means the ruling could be monumental, or that the court simply wants a little more time to review the case.Blocking the sale could force Chrysler into liquidation, according to a written argument by Solicitor General Elena Kagan of the Justice Department, the administration's lawyer before the high court.Italian carmaker Fiat was to enter into an alliance with Chrysler, taking a 35 percent stake that later could be converted to majority ownership. Under terms of the deal, however, Fiat can walk away if regulators and courts don't approve the deal by June 15.The blockage of Chrysler's sale also could affect General Motors, which is following a similar quick-sale strategy in its bankruptcy proceeding in New York."I'm delighted that it appears we'll be getting our day in court," Richard Mourdock, Indiana's state treasurer, told CNBC television minutes after learning of the delay.Representing bondholders who collectively hold less than 1 percent of Chrysler's debt, Mourdock argued that the Obama administration ignored bankruptcy-court precedent and illegally used bank bailout money to keep Chrysler afloat.

[KNINE]

[QUOTE=jake75]Italian carmaker Fiat was to enter into an alliance with Chrysler, taking a 35 percent stake that later could be converted to majority ownership. Under terms of the deal, however, Fiat can walk away if regulators and courts don't approve the deal by June 15.QUOTE]It's my understanding that the June 15'th date was set up by Chrysler and Fiat. That date can be moved if both parties agree. Since nobody else is waiting in line to by Chrysler, the Supreme court delay itself won't prevent the sale. Good for Indiana for standing up for its rights. I hope the Supreme Court hears their case.

[jimincalif]

The Supremes just turned down Indiana. R.I.P. The rule of law.

[jake75]

SAN FRANCISCO (MarketWatch) -- The Supreme Court on Tuesday cleared the way for the sale of Chrysler LLC to Fiat SpA by rejecting a plea to block the sale of most of the automaker's assets, according to media reports. Dow Jones Newswires reported that after considering appeals filed by several Indiana pension funds and consumer groups, the high court lifted a temporary hold on the sale. The bulk of Chrysler's assets can now be sold to Fiat, which is set to take over the U.S. automaker though a bankruptcy process brokered by the U.S. and Canadian governments. The companies and the U.S. government had earlier warned that a delay in the sale could cause the deal to unravel, according to reports.

[jake75]

That may not decide the underlying issue of what the bondholders get. The Court apparently just did not agree that blocking the sale was necessary.