High court asked to block Chrysler sale to Fiat

Opponents of Chrysler deal ask Supreme Court to delay sale
June 7, 2009 7:12:12 PM PDT
(06/07/09)--A Mid-Michigan Buick dealership says that it is not closing up shop without a fight. Lawyers for three Indiana state funds asked the United States Supreme Court late Saturday to delay a deal to sell most of Chrysler's assets to Fiat, their last hope of challenging the transaction after two lower courts approved it.

In documents filed to Justice Ruth Bader Ginsburg, lawyers for the funds asked to extend a stay on the sale, which is set to expire Monday at 4 p.m. The funds are seeking to have the high court re-examine the case, after the United States Court of Appeals for the Second Circuit upheld the sale Friday afternoon.

"Absent a stay, the Court will be deprived of the opportunity to decide critical, nationally significant legal issues relating to management of the economy by the United States Government," the funds said in their stay application.

Chrysler applauded the court's decision, saying it "appreciates its recognition of the need for a swift conclusion to this process so we can quickly begin building the new company."

The automaker has been trying to leave behind its debt as part of the Chapter 11 process, which would wipe out part of the pension fund's holdings. It filed for Chapter 11 on April 30.

The Chrysler Group would be comprised by several major stakeholders. The biggest share, of 55%, would be controlled by a United Auto Workers union trust. The Italian automaker Fiat would own 20% initially, though this share could eventually increase. A minority stake of 8% would go to the U.S. government, and 2% would be held by the federal and provincial governments of Canada and Ontario.

Indiana Treasurer Richard Mourdock said the pension funds are secured creditors and therefore they deserve a place at the table. White & Case, the prominent law firm representing his appeal, is arguing that the bankruptcy court ignored various legal points in approving the asset sale.

Chrysler's asset sale was approved just hours before bankruptcy filing of General Motors Corp. on June 1.

The Big Three automakers have been hammered in the last of couple years by rising fuel prices, the drying-up of bank loans to customers, and a recession that has severely hampered consumer spending.


Load Comments