Court halts Fiat bid for Chrysler
Jun 9, 2009
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Justice Ruth Bader Ginsburg signed an order postponing the closure of the plan.
The plan is backed by the US and Canadian governments and would allow Chrysler to emerge from bankruptcy as a new entity.
A group of Indiana pension funds opposed to Chrysler's sale to Fiat filed the emergency appeal with the Supreme Court.
The pension funds argument was that the sale is unconstitutional because it puts the rights of junior creditors ahead of the rights of senior lenders.
The three state pension and construction funds also said the US Treasury Department had overstepped the authority it was granted by Congress under the Troubled Asset Relief Program, a $700bn bailout intended for the financial industry, by financing Chrysler's restructuring.
A US government brief argued that 'the only other alternative is the immediate liquidation of the company,' which would be detrimental to all Chrysler's creditors.
The plan now gives Fiat a 20% stake in the Detroit group with a possibility of increasing that share.
In return, Fiat will allow access to its technology to enable the US carmaker to make the smaller, greener cars increasingly in demand
Justice Ruth Bader Ginsburg signed an order postponing the closure of the plan.
The plan is backed by the US and Canadian governments and would allow Chrysler to emerge from bankruptcy as a new entity.
A group of Indiana pension funds opposed to Chrysler's sale to Fiat filed the emergency appeal with the Supreme Court.
The pension funds argument was that the sale is unconstitutional because it puts the rights of junior creditors ahead of the rights of senior lenders.
The three state pension and construction funds also said the US Treasury Department had overstepped the authority it was granted by Congress under the Troubled Asset Relief Program, a $700bn bailout intended for the financial industry, by financing Chrysler's restructuring.
A US government brief argued that 'the only other alternative is the immediate liquidation of the company,' which would be detrimental to all Chrysler's creditors.
The plan now gives Fiat a 20% stake in the Detroit group with a possibility of increasing that share.
In return, Fiat will allow access to its technology to enable the US carmaker to make the smaller, greener cars increasingly in demand
