June 8, 2009
Chrysler's sale to Fiat under a bankruptcy court deal has hit a major speed bump. U.S. Supreme Court Judge Ruther Bader Ginsburg has granted a temporary stay, blocking the deal from proceeding.
The two sides had hoped to close on their agreement this week. However, a group of Indiana pension funds that hold Chrysler bonds sought to block the deal. Ginsburg issued a stay on their behalf that delays the deal "pending further order."
While the stay is only temporary, Chrysler warns it could be permanent. The bankrupt carmaker said a delay could mean that Fiat walks away and the deal to deliver it from bankruptcy will collapse.
Earlier in the day the deal got a green light from the U.S. Court of Appeals in New York, but the panel gave plaintiffs until 4 p.m. today to appeal to the Supreme Court. Ginsburg's stay was issued just under the wire, right before 4 p.m.
The Chrysler deal was orchestrated by the White House and drew fire from Wall Street because Chrysler's senior debt holders received less of the company than the United Auto Workers Union health fund.
