Fiat deal in trouble?

[DinoDoc]

Supreme Court Stalls Chrysler-Fiat Deal
The Supreme Court ruled moments ago that Chrysler cannot yet sell most of its assets to Fiat, a move that has been opposed by three Indiana state pension and construction funds.

The ruling grants a stay in the sale as the court gathers more data. The court has not decided whether to schedule a hearing on the matter.

It temporarily blocks the way for Chrysler to complete its merger with the Italian automaker and begin its new, post-bankruptcy life.

The U.S. favors the Chrysler-Fiat merger and wants to remove the Indiana road block.

"I'm delighted it appears we will be getting our day in court," Indiana state treasurer Richard Mourdock said in an interview on CNBC.

Here's the text of the statement from Associate Justice Ruth Bader Ginsburg:

"UPON CONSIDERATION of the application of counsel for the applicants, and the responses filed thereto,
IT IS ORDERED that the orders of the Bankruptcy Court for the Southern District of New York, case No. 09-50002, dated May 31 and June 1, 2009, are stayed pending further order of the undersigned or of the Court."

http://voices.washingtonpost.com/economy-watch/2009/06/supreme_court_holds_up_chrysle.html?hpid=topnews

Any chance the Court does the right thing and brings normalcy back to the process wrt secured and unsecured debtholders? Should the Court rule against the Admin in this case, are there any broader implications you can see satemming from this?

[Ben Kenobi]

The market can handle it.

All it means is that they will become much less valuable, especially state bonds.

[Dinner]

http://blogs.thecarconnection.com/marty-blog/1021279_breaking-supreme-court-delays-chrysler-fiat-sale

Basically its just a couple of smaller pension groups who didn't sign on to the deal, the vast majority of the debt holders have already agreed to the deal, and who are hoping to hold out for some additional money. It doesn't seem likely that the Supreme Court will intervene but if they do then it could place both the GM and Chrysler deals at risk and force liquidation instead of restructuring. I doubt congress or the President would stand for that and would intervene if necessary. Still, if the SCotUS refuses to hear the case, which experts say is most likely, then the deals will go through and Chrysler could finalize the deal as early as today or at latest the end of the week.

http://blogs.thecarconnection.com/marty-blog/1021279_breaking-supreme-court-delays-chrysler-fiat-sale

[DinoDoc]

Still, if the SCotUS refuses to hear the case, which experts say is most likely,...

Why would Ginsburg issue a stay of the sale without some indication from the other members of the Court that they wished to intervene?

[Dinner]

I'm not sure of the exact mechanics, it would be nice if one of our lawyers would explain, but is it possible that it only takes one justice to issue a stay but more justices to actually vote to hear a case? It could be that issuing a stay just means at least one justice thinks the case should be examined but it takes more then one justice to actually have the case admitted to the court.

[The Mad Monk]

The administration's take on contract law appears to be that it is ink on a page. Hopefully SCOTUS will take them to task for this.

[DanS]

I am very sympathetic to the arguments of the funds. They are getting shafted in favor of what I understand to be more junior creditors. It seems pretty clearly illegal.

Unfortunately, the gov't probably will pay off the funds and finish the Chapter 11 proceedings.

[Dinner]

As predicted the deal gets the final ok.

http://www.msnbc.msn.com/id/31185911/

The handful of minor investors who refused to sign on to the deal essentially had their case killed today when the SCotUS refused to accept their case. This is good news because it means a minority can't block the reorganization of the auto industry and common sense is prevailing.

[The Mad Monk]

...and it is bad news because individual rights got stepped on a little more.

Happy Independence Day.