The United States Supreme Court has approved a temporary halt to the sale of Chrysler assets to Italian-owned Fiat S.p.A. Justice Ruth Bader Ginsburg ruled for the court, without stating the length of the delay.
Several Indiana pension funds and construction firms opposed the sale, and took the case to the High Court. Under the current deal, the funds would only receive a small portion of the money owed them by Chrysler. The U.S. Apellate Court in New York had set a 4pm Sunday deadline for Supreme Court intervention.
At the deadline Justice Ginsburg wrote that the asset sales "are stayed pending further order." She did not state when the case would be revisited. Supreme Court rules allow Judge Ginsburg to either issue her own ruling on the appeal, or take the matter to the entire Court.
Experts believe the decision is meant to give the court more time to determine the merits of the case. Insiders fear that a lengthy delay will kill the deal.
Although Fiat is allowed to abandon the deal if it is not finalized by June 15, the Italian firm said that was unlikely to happen. A spokesman told French newswire AFP, "Fiat is committed [to the Chrysler deal] even after June 15."
If approved in its current form, Chrysler LLC will be dissolved. A new company, Chrysler Group LLC, would emerge, with Fiat owning 20 percent. The United Auto Workers health care fund would take 68 percent, while the American and Canadian governments would take eight and two percent, respectively. By hitting certain financial targets, Fiat could quickly increase their stake to 35 percent. Should Fiat pay back Chrysler's TARP loans on time, they can raise their end to 51%.
Current Chrysler LLC owner Cerberus will not have ownership in the new company.
Chrysler Fiat deal blocked by Supreme Court, for now
By Zack Newmark
June 9, 2009 12:59 PM
Filed Under: American, Chrysler, Corporate/Financial, European, Fiat, Industry
Tags: Chrysler bankruptcy
Comments
joelynn
June 9, 2009 1:11 PM
they really want to kill chrysler dont they... FIAT are Chrysler's only chance
Bristol411S3
June 9, 2009 1:32 PM
I'm not sure Fiat can pull this one off so I wouldn't be sorry to see the deal scuppered and Chrysler killed off. I am concerned about who would supply Bristol with engines though, of course. Perhaps Bristol could pick up the rights to the Windsor engine and Viper engine for pennies...?
Kashmir
June 9, 2009 3:19 PM
Why don't they just let the deal happen and get it over with!? Chrysler has been in this rut for too long and like joelynn said, FIAT really is Chrysler's only chance. To all those ppl who say that this isn't going to work, WHAT PROOF DO YOU HAVE!? How the hell would you know this thing wouldn't work? I've been in a Chrysler since my childhood! I can't afford to see them die off like this. So you ppl need to let this thing happen. I want my 500!
Bristol411S3
June 9, 2009 4:08 PM
Fact is, 80% of mergers fail. And it wasn't so long ago Fiat was in dire straits itself. It is far from being out of the woods now and wishes to absorb and support the toughest of the Big Three in the US. Why is the burden of proof on us that doubt it would work?
Prince_Ash
June 9, 2009 3:23 PM
honestly i think fiat should just drop the deal and let chrysler fall. just my opinion though.
mldrieling
June 9, 2009 3:33 PM
How many of you that say let Chrysler die are American? Yes Chrysler has made some bad and some ugly cars, but what company hasn't? The "merger" with Mercedes didn't work because the product lines were so different and the German owners refused to allow a true sharing of strengths (at the time, Chrysler design and German know-how). If FIAT can allow the strengths of each company to be utilized this can work. Stop hating the American companies because they are American.
Viking79
June 9, 2009 9:17 PM
I don't think people are hating American cars because they're American, but because the workers that build them are greedy, because their management is inept, and the end result is a poorly fitted vehicle with one of the highest rates of depreciation in the industry. Not exactly something one looks for in what is typically the second biggest investment in one's life (after a house).
Andres2007
June 10, 2009 1:17 AM
That's only partially true. The fact is, many people (especially Europeans) hate American cars because they hate America in general. They hate to think of cars made by (and I quote Jeremy Clarkson) the "Kentucky fatman" instead of the "Maranello craftsman." It's true that the business model American companies have followed has been disastrous, but proving that it is mostly nationalism that characterizes Europeans' hate toward American cars is the fact that many of you are still reluctant to give newer, better American cars like the Cadillac CTS, the Vette ZR1, or the Camaro/Mustand 2010 a chance. If someone hates those cars, nothing but the most unreasonably deep hatred toward America can explain it.
radmeister
June 10, 2009 12:34 AM
Chrysler is a death trap, full of bad management that almost brought down Mercedes, i mean seriously you have to be TERRIBLE to be able to bring down Mercedes. Look at what Chrysler did with Lamborghini when they owned them...NOTHING!, now compare that with what Audi has been able to do, and you see how strong of a company Chrysler is. Lets face it FIAT is nowhere as solid of a company as Mercedes, if this deal goes down in a matter of years there will be no more Chrysler and no more Fiat. Chrysler is cursed, and should be left to die, then their assets bought for dirt cheap and the name erased, the plants converted to build Toyotas or Hondas.
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