Tuesday, 09 June 2009 16:55

Supreme Court Lifts Stay---Chrysler Sale to Proceed

The US Supreme court rejected appeals filed by three Indiana pension funds, a coalition of consumer groups, and a few individuals, to block Chrysler's sale on June 9.

Chrysler's assets can now be sold to the Fiat-led (new) Chrysler Group LLC  for approximately $2 billion. This move brings the fast track bankruptcy proceding essentially to an end.

Chrysler case is viewed as precedent for GM, which is attempting a similar "quick rinse" strategy to emerge from Chapter 11.
The Supreme Court said those seeking to put the deal on hold "have not carried that burden" (to justify action). The court's action was not a decision on the merits of the underlying legal issues, the justices said, meaning they may or may not concur if GM's procedings are challenged, however there was no recorded opposition to lifting the stay by any of the justices.

The action represents a major victory for the Obama administration. White House spokesman Robert Gibbs said "the actions that this administration has taken now have kept plants open, have saved jobs," Gibbs said.

To read Justice Ginsburg's previous one page stay order--now lifted--- click here.

Chrysler approved to cancel 789 dealership franchises

Separately Chrysler dealers had petitioned the bankruptcy court for more time to unwind their businesses, and keep them open in order to clear inventory and provide warranty services, but on June 9---the day they were scheduled to close---Judge Arthur Gonzalez  ruled the affected dealers will no longer be able to sell new Chrysler cars, provide repairs or use the Chrysler name or trademark. Judge Arthur Gonzalez said his order, which allows Chrysler to reject all 789 dealer contracts, was effective immediately.

 

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