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Chrysler can legally sell assets to Fiat; Supreme Court Decision
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by tvtayber | June 9, 2009 at 10:28 pm
101 views | 14 Recommendations | 2 comments
The Supreme Court has cleared the sale of Chrysler's assets the Italian automaker Fiat. The decision will allow Chrysler to generate needed funds from the sale of some of its assets as part of a bankruptcy restructuring plan.
On Monday, Justice Ruth Ginsburg ordered a temporary suspension of the sale. She decided to review an appeal by a group of Indiana pension and construction funds that own a small part of Chrysler's secured debt. They claimed the deal unfairly favours Chrysler's unsecured stakeholders over secured debt-holders like them.
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But the U.S. supreme court rejected the plea from the pension group to block the sale on the grounds that the issue was not serious enough to have the the supreme court overturn the lower court's decision.
To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
"The applicants have not carried that burden," the court said.
The deal should allow the Italian automaker, who produces mostly small, eco-friendly cars, the chance to get a small foot hold into the American market. They will take over one of Chrysler's factories with exclusive rights to production and distribution of Fiats and Alfa Romeos in the U.S.
Chrysler will gain Fiat's small engine and chasis production technology allowing the company to compete in the compact and midsize car market.
For more details about exactly what the deal means see Motor Trend and Wired.
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Most RecentMost Recommended Comments (2)
at 02:31 on June 10th, 2009
Thank you, good post:)
at 07:03 on June 10th, 2009
The state of Indiana is going to be in financial discord from this because they bought Chrysler at a low price WHEN IT WAS IN TROUBLE. Whoever made the decision to buy that stock for police pensions and other things should be fired. You don't invest in a troubled company for pensions.
The Indiana funds bought 42.5 million dollars of Chrysler in July 2008 for 43 cents on the dollar.
Can you imagine taking that sort of risk with pension fund money when any intelligent person would know that GM and Chrysler have been in trouble for a long time????
Heads would roll if I were in charge.