A US Supreme Court justice has temporarily blocked the sale of Chrysler to Fiat. Could this be the deal's death blow?
The United States Supreme Court has approved a temporary halt to the sale of Chrysler assets to Italian-owned Fiat S.p.A. Justice Ruth Bader Ginsburg ruled for the court, without stating the length of the delay.
Several Indiana pension funds and construction firms opposed the sale, and took the case to the High Court. Under the current deal, the funds would only receive a small portion of the money owed them by Chrysler. The U.S. Apellate Court in New York had set a 4pm Sunday deadline for Supreme Court intervention.
At the deadline Justice Ginsburg wrote that the asset sales "are stayed pending further order." She did not state when the case would be revisited. Supreme Court rules allow Judge Ginsburg to either issue her own ruling on the appeal, or take the matter to the entire Court.
Experts believe the decision is meant to give the court more time to determine the merits of the case. Insiders fear that a lengthy delay will kill the deal.
Although Fiat is allowed to abandon the deal if it is not finalized by June 15, the Italian firm said that was unlikely to happen. A spokesman told French newswire AFP, "Fiat is committed [to the Chrysler deal] even after June 15."
If approved in its current form, Chrysler LLC will be dissolved. A new company, Chrysler Group LLC, would emerge, with Fiat owning 20 percent. The United Auto Workers health care fund would take 68 percent, while the American and Canadian governments would take eight and two percent, respectively. By hitting certain financial targets, Fiat could quickly increase their stake to 35 percent. Should Fiat pay back Chrysler's TARP loans on time, they can raise their end to 51%.
Current Chrysler LLC owner Cerberus will not have ownership in the new company.