Chrysler Sale to Fiat-Led Group Is Delayed by Supreme Court

[cobra de capell]

Chrysler Sale to Fiat-Led Group Is Delayed by Supreme Court

http://http://www.cnbc.com/id/31168688

From the article....

“It’s the first time in American history where secured creditors were not treated as secured creditors,” Richard Mourdock, Indiana's state treasurer said on CNBC shortly after the delay was announced. "“We don’t think the administration can egregiously and arbitrarily throw 150 years of bankruptcy law out the window without process of law.”

The Obama administration, earlier on Monday, urged the Supreme Court to allow the sale, saying that blocking the deal would have "grave consequences."
_____

I'd love to see the Obama Administration get slapped down on this one.

Perhaps they will even find "tarp funds" to be unconstitutional?

[PSB]

Glad to see SOME sanity still exists in our government.

[cobra de capell]

I sure will be interesting to see how this works out.

Here's an exchange that highlights the issues.....

A bit more from the lawyer, Thomas Lauria, who is challenging the Chrysler deal. From an interview with Susie Gharib, Bankruptcy Attorney Thomas Lauria Reviews The Chrysler/Fiat Case

"GHARIB: I'm fine, thank you. Let me begin by asking you that if you do make an argument before the Supreme Court, what's the case that you're going to make on behalf of your Indiana investors?

LAURIA: Well, there are really two issues. The first one is that the executive branch of the government has no statutory or constitutional authority to take over and run a car company as it's done with Chrysler. The second argument is that the scheme that the government put together with the company and some of the other stakeholders is really a sham transaction that was designed to upend the priority scheme under the bankruptcy code and to deprive my clients of their contractual rights.

GHARIB: So you're saying on the first point, you're saying that the government didn't even have a right to give those bailout funds to Chrysler. That's number one. Number two is, what's the take away money or restructuring part of the deal, right?

LAURIA: Correct.

GHARIB: All right. So then what's the end game here? What do you want to happen?

LAURIA: Well, we want to see Chrysler be reorganized in a way that complies with the law. I think it's actually pretty easy to do. Rather than try to characterize this as a liquidation of Chrysler for $2 billion which gets paid to the secured lenders and then giving the $20 billion going concern value of the company to junior creditors, what you should do is sell the assets for the full price, $22 billion and then let the creditors share that $22 billion which is cash, debt and equity according to their contractual rights and the priority under the bankruptcy code.

GHARIB: But time is running out here and if the deal between Chrysler and Fiat doesn't go through and Chrysler is forced to just liquidate, my understanding is that the value of the company, the break up value of Chrysler is under a billion dollars.

LAURIA: Well in fact there's no competent evidence in the record what the liquidation value of Chrysler is. The expert who testified in front of the bankruptcy court below left out critical assets from his valuation analysis. He used multiples that were well under market and most interesting to me, he was going to get a $10 million success fee if the deal went through which really raises a question as to whether or not his testimony was biased."

Lauria continues on in the interview to dismiss the June 15 deadline. Basically, Fiat won't walk away from this deal. Why would they when they've been promised 20$ of the company with nothing down?

This thing stinks and the Obama Administration is the source of the smell.

[fsstnotch]

http://news.yahoo.com/s/ap/us_supreme_court_chrysler

The court rejected a plea to block the sale of most of Chrysler's assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court's intervention could have scuttled the sale.

http://www.msnbc.msn.com/id/31185911/

The Supreme Court on Tuesday cleared the way for Chrysler LLC's sale to Fiat, turning down a last-ditch appeal by opponents that included consumer groups and three Indiana pension plans.

http://www.foxnews.com/politics/2009...ers-sale-fiat/

The Supreme Court on Tuesday cleared the way for Chrysler's partnership with Italy's Fiat, rejecting an appeal by a trio of Indiana pension and contruction funds, consumer groups and others to block the automaker's sale.

All of these links seem to contrast what you posted???

Looks like Obummer got his way....

[cobra de capell]

I posted just before it was decided to allow the sell.

I think Scalia, Thomas, Roberts, and Alito declined taking up the case because they had good reason to believe Kennedy would side with the statist wing of the court. They must have made the decision that it was better for the Supreme Court to remain silent than to permanently undermine the spirit and letter of the Constitution by handing down a bad ruling.

Stick a fork in Chrysler - who is going to buy one?

[Jamo]

Don't know, but if any new Ferraris start showing up in the Court's parking garage, there might be a few questions.

[cobra de capell]

I'm simply taken back that they passed on this case.

By the way, there is a new bill in Congress that will eliminate the two term limit on the POTUS.

[Jamo]

Me too...seemed like a ripe case for at least a hearing.

Yup...I think Chavez suggested it.

[Wayne Maybury]

It is interesting that this is a "Fiat led deal" when Fiat will actually only have a minority share in the new Chrysler. The UAW (through it's pension plan) will own about 2/3 of the company, Fiat some 15 to 20%, the Canadian Government 2.5%, and the US Government the remainder. It will be interesting to see how the UAW will negotiate with itself.

Wayne

[cobra de capell]

"The $2 billion sale of Chrysler's assets to a new company that will be 68 percent controlled by a healthcare trust aligned with the United Auto Workers union was approved by a U.S. bankruptcy judge on June 1.

Fiat will control 20 percent, the U.S. and Canadian governments will control the other 12 percent.

Both a federal bankruptcy judge and a U.S. appeals court in New York have approved the sale."
_____

So, the UAW negotiating with itself and Fiat having to negotiate with workers that own the company - sounds more than passingly strange and unworkable.

[Jamo]

Yup...strange and it will be fun to watch them eat their own. Similar situation when the UAW sat on the Board after Chrysler's first bailout.

Reminds me of a few years ago when a union law firm we do battle against on a regular basis were the subject of a unionization effort by their secretaries and other staff people. The union won, and the union attorneys had to negotiate with the union over their staff's salaries and benefits...they had complaints issued against them by the NLRB for bad faith bargaining before they finally resolved the issues and reached a contract. Now their managing partner b!tches about having to go through grievance and arbitration procedures every time he looks cross-eyed and a staff person.

It gives me joy to hear him b!tch...he hates it when I laugh.

[Dan40]

Originally Posted by Wayne Maybury

It is interesting that this is a "Fiat led deal" when Fiat will actually only have a minority share in the new Chrysler. The UAW (through it's pension plan) will own about 2/3 of the company, Fiat some 15 to 20%, the Canadian Government 2.5%, and the US Government the remainder. It will be interesting to see how the UAW will negotiate with itself.

Wayne

Comparable to "Self Gratification?"

[427sharpe]

And don't forget the real gem I thought the SC would hear...the 'new' Chrysler is EXEMPT from product liability litigation for any product produced by the 'old' Chrysler!
I had read that the UAW would own +/-20%..what happened?