Latest News

Supreme Court clears way for Chrysler's sale to Fiat

WASHINGTON — The Supreme Court removed late Tuesday what may be the last legal barrier to the sale of Chrysler's assets to the Italian carmaker Fiat.

In a two-page, unsigned decision, the court lifted the temporary stay that had been imposed Monday by Justice Ruth Bader Ginsburg. The decision followed furious last-minute legal maneuvering and dire warnings of what might happen if the sale didn't go through.

"In a close case, it may be appropriate to balance the equities, to assess the relative harm to the parties as well as the interests of the parties at large," the decision said.

Indiana state pensioners, consumer advocates and individuals who're suing Chrysler, among others, had hoped the high court would block the bankruptcy sale at least long enough to resolve some pressing legal questions. Ginsburg issued her temporary stay Monday afternoon, shortly before a 4 p.m. deadline.

The Obama administration, though, had argued forcefully that time was of the essence.

"If the sale is not consummated by June 15, there is a substantial possibility that Fiat will abandon the transaction or insist on materially different terms," Solicitor General Elena Kagan said in a legal filing Tuesday afternoon.

The contract terms permit Fiat to walk away from the deal unless the June 15 deadline is met. The Obama administration argues that more than 38,000 Chrysler employees would lose their jobs, 23 manufacturing facilities and 20 parts warehouses would be closed and more than 3,000 Chrysler dealers would suffer significant business harm.

Chrysler expects to lose $4.7 billion this year, according to a recent regulatory filing.

Administration officials further feared that collapse of the Chrysler deal could affect General Motors, which is following a similar strategy in its bankruptcy proceeding in New York. GM filed for Chapter 11 bankruptcy protection on June 1.

Nonetheless, the Indiana State Teachers' Retirement Fund and other Indiana groups petitioned the Supreme Court on Saturday to block the sale.

Later, the Center for Auto Safety, the Ad Hoc Committee for Consumer-Victims of Chrysler and other consumer groups joined in, as did Patricia Pascale, who's suing Chrysler in Los Angeles over the death of her husband, a Chrysler employee who died of complications from exposure to asbestos, allegedly on his job as a brake worker.

The various groups wanted to freeze the action so that the court could consider a petition that would set the stage for a full-blown hearing. The consumer groups wanted the court to address whether corporate liability can be eliminated through bankruptcy proceedings. The Indiana pension groups wanted the court to consider whether the auto deal improperly rewrites the bankruptcy laws.

First, however, the groups opposing the Chrysler sale needed four justices to agree to hear the case. The court's decision late Tuesday made clear that this wasn't going to happen.

"A denial of a stay is not a decision on the merits of the underlying legal issues," the decision said.

Rather, the court noted that a longer-term hold on the sale would've been justified only if there was a "probability" that four justices would've found the issue "sufficiently meritorious" and a "fair prospect" that a majority of the nine-member court would've reversed a lower court's decision.


Supreme Court's Chrysler decision


Follow the latest legal affairs news at McClatchy's Suits & Sentences

To ask a question about this story or any economic question, go to McClatchy's economy Q&A

Lawmakers scramble to help auto dealers and consumers

Senate sets July 13 hearing date for Sotomayor