The US Supreme Court has cleared the way for the sale of Chrysler LLC to a group led by Italian carmaker Fiat, a victory for the bankrupt automaker and the Obama administration.
REUTERS - The Supreme Court on Tuesday cleared the way for the U.S. government-backed sale of Chrysler LLC to a group led by Italian carmaker Fiat SpA, a victory for the bankrupt automaker and the Obama administration.
The high court rejected a request from Indiana pension funds and other opponents of the transaction to delay the deal while they challenge Chrysler's sale to a group led by Fiat, a union-aligned trust and the U.S. and Canadian governments.
The Chrysler case has been widely regarded as setting a precedent for General Motors Corp, which also is using a similar quick-sale strategy in its bankruptcy in New York.
The Supreme Court in a brief two-page order said those seeking to put the deal on hold "have not carried that burden" to justify such action. The court's action was not a decision on the merits of the underlying legal issues, the justices said.
The Chrysler dispute marked the first time the Supreme Court had been confronted by legal issues involving the U.S. government's power to deal with the economic crisis.
The pension funds argued the Chrysler sale unlawfully rewarded unsecured creditors ahead of secured lenders, it amounted to an illegal reorganization plan, and the U.S. Treasury Department overstepped its powers by using bailout funds for Chrysler when Congress intended the money for banks.
Chrysler and the Obama administration urged the Supreme Court to allow the sale to go forward and said a long delay could kill the deal, resulting in the automaker's liquidation and the loss of more than 38,000 jobs.
They cited Chrysler's worsening financial situation, with $100-million-a-day losses. The sale agreement sets a June 15 deadline to close.
It would have taken the votes of five of the nine Supreme Court members to grant a stay putting the deal on hold. The court acted with no recorded dissent from any of the justices.
The White House had no immediate comment.
Date created : 2009-06-10