NEW YORK (Reuters) - A U.S. Supreme Court justice on Monday granted a request to put on hold the sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA.
U.S. Supreme Court Justice Ruth Bader Ginsburg, in a one-sentence order, said the orders of the bankruptcy judge allowing the sale “are stayed pending further order of the undersigned or of the court.”
The Chrysler case could set a precedent for General Motors Corp, which is using a similar quick-sale strategy in its bankruptcy in New York.
Indiana pension funds and consumer groups had asked the Supreme Court on Sunday to stop the sale of Chrysler to Fiat while they challenge the deal.
The funds argued that the sale of Chrysler unlawfully rewards unsecured creditors ahead of secured lenders and amounts to an illegal reorganization plan, and that the U.S. Treasury Department overstepped its legal authority by using bailout funds for Chrysler when Congress intended the money for banks.
JERRY REISMAN, PARTNER, REISMAN, PEIREZ AND REISMAN, NEW
“Unless Chrysler is allowed to reorganize and sell its assets to Fiat, GM will certainly face the same type of opposition from objecting creditors which will doom GM’s reorganization.”
SCOTT STUART, PARTNER, DONLIN RECANO (CLAIMS AGENT AND
FORMER U.S. TRUSTEE)
“The government has potentially usurped the legal scheme of how the creditors are paid.”
“You may not get the (desired) end result. The Supreme Court’s job is to make sure the law is interpreted correctly. The very unusual nature of this situation where you have taxpayer money coming up against the current way the law is written and the Supreme Court will deter whether the law as written have been applied in a correct manner.”
STEVEN GROSS, CO-HEAD OF THE RESTRUCTURING GROUP AT LAW
FIRM DEBEVOISE & PLIMPTON LLC, IN NEW YORK
“If the court waits too long, Chrysler might not be around.”
“Until the court decides, they’re not restructuring period. I think this (restructuring) has now effectively been put on hold until we get further information. The expectation is the court will act promptly. But we’ll have to wait and see.” 064 Affect on GM’s restructuring?
“I don’t think it’s possible to tell. We don’t know why the court has agreed to extend the stay. We have no transparency on any of it.
“I haven’t really seen much like this before. This whole thing is pretty unusual.”
CONGRESSMAN GARY PETERS, WHOSE DISTRICT IS HOME TO CHRYSLER
“It is quite clear that Indiana’s case is not in the best interest of the people of Indiana. Other stakeholders, including other secured lenders and Chrysler’s autoworkers, accepted shared sacrifice because they recognized their interest was better served keeping Chrysler alive rather than forcing liquidation.
“Why the officials who decided to take their objections all the way to the Supreme Court can’t recognize this is beyond me.
“Indiana officials are fighting over $4.8 million at the risk of costing their state over $20 million in tax revenue, tens of millions more in related costs and putting 4,000 of their own people out of work.”
RICHARD MIKELS, PARTNER AT MINTZ LEVIN LAW FIRM, BOSTON
“I am quite surprised because I didn’t think the Supreme Court would want to hear the case - the courts below had given the pensioners objections enough consideration.”
“It could be the Supreme Court just wants to make sure the pensioners are being heard, but if the June 15 deadline passes and Fiat walks away, it would be very serious.”
SHERYL TOBY, ATTORNEY, CO-LEADER OF BANKRUPTCY PRACTICE
GROUP, DYKEMA, BLOOMFIELD HILLS, MICHIGAN
“The real issue is that when you do a sale through section 363 of the bankruptcy code, there are provisions that basically make that irreversible from a practical sense because it can become final immediately. I don’t think this gives you an indication that they’re ruling on the merits, but she (Ginsburg) is maintaining the status quo at least to determine whether to consider the appeal.”
“This is an unusual case, period.... There’s not really a precedent, nor can we say that this case will be a precedent. Time will tell.”
Reporting by James Vicini, Soyoung Kim, Tom Hals, Chelsea Emery, Poornima Gupta, Phil Wahba, Emily Chasan
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