Chrysler Sale to Fiat Delayed

The sale of Chrysler’s assets to a group consisting of Fiat, the U.S. government, and the UAW healthcare trust has been put on hold by Supreme Court Justice Ruth Bader Ginsburg.

According to the Associated Press, Justice Ginsburg ordered the sale “stayed pending further order.”

Ginsburg’s delay of the Chrysler sale means that the Supreme Court will review the merits of objections made by the State of Indiana, consumer groups and individuals with pending lawsuits against Chrysler.

The State of Indiana believes that, if the sale to Fiat goes through, unsecured lenders such as the U.S. government and the UAW healthcare trust would be getting preferential treatment over secured lenders like its pension fund.

Consumer groups and individuals with lawsuits against Chrysler for faulty products took issue with the fact that, if the bankruptcy is resolved as planned, New Chrysler would not be responsible for any liability on cars and trucks bought before the bankruptcy.  If that happens, anyone injured by a Chrysler product would be forced to sue the old Chrysler, which would not be able to pay, rather than New Chrysler, which would.

If the sale doesn’t go through by June 15th, Fiat has the option to pull out of the deal.  If that happens, Chrysler will most likely go into liquidation.  A liquidation of Chrysler’s assets would mean a much smaller return for the U.S. government on the bailout money given to Chrysler.