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Supreme Court Delays Sale of Chrysler to Fiat

06/08/2009
The U.S. Supreme Court has temporarily stopped the sale of Chrysler's assets to Italian automaker Fiat, pending additional consideration of an appeal by three Indiana state funds. The New York Times reports that Justice Ruth Bader Ginsburg issued a stay of the sale that will prevent Chrysler and Fiat from completing the transaction immediately. Attorneys for the Indiana funds, which represent teachers and police officers, filed an appeal to the high court after losing an appeal in the Second Circuit, which reaffirmed a lower court's approval of the sale. The Times says that the Indiana funds are seeking greater compensation for their portion of Chrysler's $6.9 billion secured debt and have argued that the Obama administration illegally provided Chrysler with federal bailout funds earmarked for financial institutions. "The negative economic consequences of permitting an unlawful sale to proceed may well over time dramatically outweigh Chrysler's short-term harm," said the funds in their brief to the court, as quoted by the Times. Attorneys for Chrysler and the federal government argue that the sale to Fiat should be completed quickly to preserve Chrysler's viability and save thousands of jobs. Fiat has an option to walk away from the deal if no agreement is in place by June 15. Under the terms of its agreement with the government, Chrysler must sell the majority of its assets in order to avoid liquidation. No time frame has been set for the additional appeal.

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