Three separate requests filed in Indiana by pension funds and consumer groups have asked the U.S. Supreme Court to stop the sale of Chrysler to a group led by Fiat. The groups filing the complaints hope to buy some time while challenging the deal. Some believe that this case could set a precedent for General Motors, which is trying to employ a similar "quick-sale" strategy as Chrysler. Late Friday, an appeals court stayed the closing of the sale until this afternoon, which gave the pension funds and opponents the weekend to make their plea to the Supreme Court.
The three pension funds argued that the sale of Chrysler unlawfully rewarded unsecured creditors, like the union rather than secured lenders. The funds hold roughly $42 million of Chrysler's $6.9 billion in secured loans. Lawyers for the pension funds argued, "the need for the court to review the profound issues presented by Chrysler's novel bankruptcy sale far outweighs the cost of delaying [a sale]."
The funds also argued that the U.S. government overstepped its legal authority by using bailout funds intended for banks in order to keep the automaker afloat. The lawyers summed this up by noting, "The public is watching and needs to see that, particularly, when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch."
Without the Supreme Court's intervention, the sale of Chrysler will close today. The consumer organizations stated that they planned to file their appeal with the high court by Tuesday. In New York, a federal bankruptcy judge and the three-judge appeal panel rejected these challenges when they approved the sale.
Chrysler and Fiat attorneys, along with the U.S. government, have argued that the sale should be allowed to move forward. Fiat is allowed to walk away from the deal if it isn't closed by June 15.
Justice Ruth Bader Ginsburg received the filing, as she has responsibility for emergency matters from the court. Ginsburg could decide the outcome on her own, or turn it over the the full court, which would require votes from five of the nine members.
Are the groups right in filing this motion with the Supreme Court? I tend to believe so, but this is up to the courts, which I don't think is the best place for this deal to be worked out. Any delay could kill the deal, and this is not what needs to happen. At least Fiat is willing to buy the company -- I'm not sure how many other companies are.
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