Wednesday, June 10, 2009

U.S. judge suspends Fiat takeover of Chrysler

A judge of the U.S. Supreme Court on Monday stopped the sale of Chrysler's assets to Fiat, pending a further order from the court.

Judge Ruth Bader Ginsburg issued the decision after three Indiana pension funds sought to have the sale blocked.

The funds had asked the court to hear their appeal of two lower court rulings backing the sale.

Ginsburg's two-paragraph order did not address that issue, but it does give the court time to consider what it wants to do.

It suspended the order of the New York bankruptcy court, which originally supported the sale. The bankruptcy court order was backed by a U.S. appeals court on Friday, but it gave the pension funds until Monday to appeal to the Supreme Court.

The Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund and the state's Major Moves Construction Fund filed their appeal Sunday, claiming that the sale unfairly favours Chrysler's unsecured stakeholders ahead of secured debt-holders like them.

Chrysler wants to sell the bulk of its assets to a group led by Italy's Fiat as part of its plan to emerge from bankruptcy protection.

Fiat had set a June 15 deadline to close the deal, but after Ginsburg's ruling, Fiat CEO Sergio Marchionne told Bloomberg News that the company would “never” abandon the purchase.

The U.S. government backs the deal and filed documents with the top court Monday opposing the request to halt the sale.

Arthur Gonzalez, the bankruptcy judge, approved the sale to Fiat May 31, ruling that it was Chrysler's only alternative to liquidation.