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US Supreme Court Okays Chrysler Sale

By Motortrend India Staff   |   10 June,2009

The Supreme Court of Unites States of America has cleared the way for the government backed sale of Chrysler to Italian car manufacturer Fiat SpA. There was no recorded dissent from any of the nine justices while arriving at the decision. It is being hailed as a victory for the bankrupt automobile manufacturer and U.S. President Obama's administration. This comes after General Motors bankruptcy issue last week.

The Supreme Court in the order stated that those who wanted the deal withheld for a longer time were not justified in supporting their claims. The brief two page statement also said that the court's action was not a decision based on the merits of the underlying legal issues.

The Indiana pension funds and other opponents had challenged Chrysler's sale to Fiat with the argument that it would unlawfully benefit the unsecured creditors ahead of the secured lenders and also that it amounted to an illegal re-structuring plan in which the U.S. treasury department had gone beyond its authority by using Chrysler bailout funds when it was actually intended for the banks.

Representatives of Chrysler Corporation and the Government urged the Supreme Court to allow the sale to happen as the deal would fail in case of further delay. The delay would result in the company's liquidation and the loss of jobs of nearly 38,000 people.

The government also citied Chrysler's worsening financial situation as it recorded losses to the tune of $100 million. The sale agreement deadline is set to June 15.

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