The Supreme Court's decision could mean Chrysler assembly lines could soon start running again.
The Supreme Court has brushed back what had been viewed as the last potentially serious challenge to the restructuring plan laid out by Chrysler, clearing the way for the bankrupt U.S. makers emergence from Chapter 11, and its takeover by the Italian automaker Fiat.
The plan has been blessed by the Obama Administration, which has pumped billions into Chrysler to keep the company alive, had been put on hold on Monday when Supreme Court Justice Ruth Bader Ginsburg decided to consider an appeal by the guardians of an Indiana state pension fund. They had argued that lower courts were abrogating traditional bankruptcy law by placing unsecured creditors, such as Chrysler’s unions, in a more favorable position than secured lenders, like the pension fund.
The Court’s stay triggered fear among Chrysler’s backers that the bankruptcy plans might fall apart if the process were to drag out. The Obama Administration has been pushing for a June 15 deadline, fearing Fiat might walk away from the deal or renegotiation it. But critics of the plan noted that Fiat CEO Sergio Marchionne said, on Tuesday, that he would not be driven away if that deadline were missed.
Even so, Chrysler has reportedly been losing about $100 million a day while in bankruptcy court – in large part because it doesn’t plan to start its plants back up until it emerges – hastening the need to get it out of Chapter 11. That led government representatives to insist that they would be forced, within 10 days to “either…increase (the government’s) overall funding to the detriment of taxpayers, or abandon its role in the transaction.” (more…)