Chrysler-Fiat Deal: Will It or Won't It? Only Supreme Court Knows for Sure
June 08, 2009
By Bill Visnic
Tension mounted over the weekend as investors in Chrysler LLC asked the U.S. Supreme
Court to consider their appeal of the sale of Chrysler's assets for Fiat S.p.A.
Given past history, it was unlikely the Supreme Court would further delay the decision of a New York appeals court that approved the sale. But the three objecting constituencies -- investment funds located in Indiana, including ones for state police and teachers -- submitted an emergency request that Supreme Court Justice Ruth Bader Ginsberg will consider, the Associated Press reported.
It was expected Justice Ginsberg would decide on the merits of the emergency appeal Monday.
The appeals court in New York upheld the decision in the state's bankruptcy court by Judge Arthur Gonzalez that Chrysler's assets could be sold to Fiat. But the Indiana investors, not to mention another group and individuals opposing the sale because it reputedly will negate the possibility of suing the former Chrysler over product-liability matters.
It was believed the odds were highly stacked against Justice Ginsberg recommending the Supreme Court entertain the matter, but on Sunday some Washington critics hit the airwaves to continue the pressure on the Obama administration regarding the conduct of the Chrysler bankruptcy proceedings.
Senator Richard Shelby (R-AL) said on Fox News Sunday the Obama administration's maneuvers were socialistic and the process had subvented accepted bankruptcy-law precedent by manipulating the process to favor unsecured creditors over senior secured creditors.
Shelby's position was not newly minted, but it is one that has gained supporters in the weeks since Chrysler declared its bankruptcy on April 30. A different group of investors initially vowed to oppose Chrysler's bankruptcy on much the same legal grounds and the group's lawyer said the White House had threatened recrimination against the dissenters if they did not drop their objections. The group soon did just that, however.
Now, in addition to the argument that accepted bankruptcy-law conventions are being railroaded, the Indiana investors also are challenging the Constitutionality of the Obama administration's proposed use of money from the U.S. Department of Treasury's now-infamous Troubled Assets Relief Program (TARP) to fund Chrysler while in bankruptcy.
Chrysler and Fiat wanted approval for the asset sale last week, as various parties suggested delays could negatively affect the ability of Chrysler to recover. The company shut down all of its assembly plants when it declared bankruptcy and has made no new vehicles for more than six weeks.
Chrysler Vice President of Sales Steven Landry said last week that Chrysler planned to restart some assembly plants by the end of the month. A delay in selling Chrysler's assets to Fiat could affect that plan and subsequently impact the supply of fresh vehicles to Chrysler dealerships.
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