Supreme Court allows Chrysler sale to proceed

[JURIST] The US Supreme Court [official website] on Tuesday night released an order [opinion, PDF] allowing the sale of Chrysler Group assets to Italian automaker Fiat [corporate websites] to proceed. The two-page opinion vacates a temporary stay [JURIST report] issued on Monday by Justice Ruth Bader Ginsburg [official profile, PDF] on the grounds that the petitioners did not meet their burden of showing that a delay is justified. In determining the request for delay, the Court considered whether the petitioners had demonstrated a "reasonable probability" that four justices will consider the issue meritorious, a "fair prospect" that a majority of the Court will conclude the lower court's decision erroneous, and a "likelihood that irreparable harm will result from the denial of a stay." The stay was requested [JURIST report] by consumer groups, three Indiana pension and construction funds and others. Chrysler and Fiat reportedly finalized their deal [WSJ report] Tuesday night.

Also on Tuesday, the US Bankruptcy Court for the Southern District of New York [official website] approved a plan by the Chrysler Group to sever ties with 789 dealers [opinion, PDF] as Chrysler attempts to navigate bankruptcy. Judge Arthur Gonzalez approved the action, meaning that the dealerships can no longer sell or offer repairs [Washington Post report] to customers with Chrysler automobiles under the badge of an authorized dealer.

The pension and construction funds alleged that the use of Trouble Asset Relief Program (TARP) [materials] funds to finance the bankruptcy is unconstitutional. The consumer groups challenged the sale on the grounds that the terms would limit their ability to recover for product liability actions. The Court's order did not address these issues. Last week, the US Court of Appeals for the Second Circuit [official website] approved the sale [JURIST report] of most of the Chrysler's assets to Fiat, but said the deal could not be completed until the Supreme Court heard the matter. The ruling upheld a previous decision [JURIST report] by the Bankruptcy Court.

 

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