A group of Chrysler creditors from Indiana has been granted a stay by Supreme Court Justice Ruth Bader Ginsberg in their attempt to stop Chrysler from selling its assets to Fiat.
Three Indiana-based pension funds and a construction fund who had made loans to Chrysler LLC,
filed an emergency appeal with Supreme Court Justice Ginsberg last week asking the court to stop the sale of Chrysler to Italian automaker, Fiat SpA.
Today, Justice Ginsberg temporarily delayed the sale of Chrysler to Fiat
saying that the sales is "stayed pending further order." This usually indicates that the order is a temporary one, and there is speculation that Ginsberg could either decide on her own whether to extend the stay or she could ask the full court to decide.
Ginsberg's order came just before 4 pm EST today, the agreed and stated time after which Chrysler would have been free to finish the sale to Fiat. Chrysler has said in the past that any delay could possibly "
scuttle" the deal.
The pension funds say in their brief that the Fiat/Chrysler deal is a "
misuse of the authority by U.S. Treasury Department under Troubled Asset Relief Program." In fact, they argue that the TARP program was not meant to be applied to carmakers, and was designed to rescue financial institutions.
The Wall Street Journal quoted the legal brief filed by the pension funds as saying:
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 New York Times quoted the legal brief as saying:
The negative economic consequences of permitting an unlawful sale to proceed may well over time dramatically outweigh Chrysler’s short-term harm.
The Indiana-based funds were holding $42.5 million of the estimated $6.9 billion in secured loans held by Chrysler. Chrysler filed for bankruptcy at the end of April, 2009.
