The sale of bankrupt car maker Chrysler to a group led by Italian carmaker Fiat was temporarily blocked by a US Supreme Court justice yesterday, with no indication how long the delay would last.
In a one-sentence order, Justice Ruth Bader Ginsburg said the bankruptcy judge's orders allowing the sale 'are stayed pending further order' by her or by the Supreme Court. It was unclear what the next step would be. Ginsburg acted right before a deadline from a US appeals court in New York.
The end of the appeals court order would have allowed Chrysler to proceed with its Obama administration-backed sale to Fiat, a union-aligned trust and the US and Canadian governments.
Both Chrysler and the Obama administration have said a long delay could kill the deal and end up with Chrysler's liquidation. Fiat can walk away from the deal if it does not close by June 15.
The Chrysler case could set a precedent for General Motors, 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 over the weekend to stop the sale of Chrysler so they could challenge the deal in an appeal to the nation's highest court.
Bankruptcy lawyers said Ginsburg's order could be designed to give the high court more time to decide whether to intervene in the dispute.
The Obama administration had urged the Supreme Court to allow the sale, saying that blocking the deal would have 'grave consequences.'
Chrysler filed for bankruptcy protection on April 30 to complete the sale and alliance with Fiat within 60 days, in a case that analysts have seen as a test for the much bigger and more complex bankruptcy of GM.
The $2 billion sale of Chrysler's assets to a new company that will be 68% controlled by a healthcare trust aligned with the United Auto Workers union was approved by a US bankruptcy judge on June 1. Fiat will control 20%, the US and Canadian governments will control the other 12%.
