Chrysler sale imminent as court lifts ban
BY RON HAMMERTON | 10th Jun 2009
Justice Ruth Bader Ginsburg had granted the temporary halt on the sale of the ailing car-maker while she reviewed applications from Indiana pension funds and other investors who want to challenge the re-organisation on the grounds that they have been unfairly shortchanged.
But she lifted the stay, saying the parties requesting the halt had not “carried the burden” of justifying the Supreme Court’s intervention.
The US government told the court that Chrysler was losing $US100 million ($A124 million) a day, and that treasury aid to keep the company afloat would likely run out by the end of the month unless the re-organisation went ahead.
Lawyers for both Chrysler and the Obama administration said any delay would put the efforts to rescue Chrysler at risk, resulting in its immediate liquidation with the loss of 38,000 jobs.
Fiat told the court that its offer to buy a large chunk of Chrysler was due to run out on Monday and there was no assurance of reaching another deal.
Under the re-organisation brokered by the Obama administration and the US treasury department, a fund controlled by the United Auto Workers (UAW) union will also become a large shareholder, along with the US and Canadian governments.
The ink on the Supreme Court decision was hardly dry before the US bankruptcy court in New York approved Chrysler’s application to terminate 789 of its US dealerships, describing the move as “appropriate and necessary”, according to The Detroit Free Press.
Chrysler says the terminated dealers account for just 14 per cent of Chrysler sales.
The Chrysler court moves are being viewed as a precedent for General Motors, which is pushing ahead with its own sale plan under Chapter 11 bankruptcy.
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