US Supreme Court clears way for Chrysler-Fiat accord
Güncelleme Tarihi:
AFP
Oluşturulma Tarihi: Haziran 11, 2009 00:00
WASHINGTON - The U.S. Supreme Court has cleared the way for Chrysler's alliance with Fiat, lifting a freeze on a government-backed deal intended to save the Detroit automaker from liquidation.
The nine-member court late Tuesday reversed the freeze - introduced by Justice Ruth Bader Ginsberg the previous day - which gave justices time to weigh complaints from Chrysler investors who argued they would be short-changed and their rights' trampled by the Fiat deal.
In a two-page order, the court said the disgruntled investors - a group of Indiana pension funds - had failed to show "that the circumstances justify" the stay placed on a lower court's approval of the deal.
"The temporary stay entered by Justice Ginsburg on June 8 is vacated," the court said.
The move paves the way for a Fiat-Chrysler tie up, which executives and the U.S. government hope will allow the venerable but bankrupt automaker to avoid liquidation.
The case was watched closely as a possible precedent for bankruptcy proceedings against General Motors which the U.S. government has also bailed out and ushered toward bankruptcy to allow a quick restructuring.
But while Tuesday's decision may have eased the government's immediate trepidation, some aspects of the Supreme Court's ruling will keep nerves on edge for GM's bankruptcy.
In considering the request for a stay, the high court explicitly said it was not deciding the merits of the underlying legal issues.
Losing millions each day
Italy's Fiat, one of Europe's biggest automakers, now is expected to take an initial 20 percent share in Chrysler, in return for sharing technology that can be used to build, smaller, more fuel efficient cars.
The U.S. Justice Department urged the Supreme Court to allow the deal, arguing that because Chrysler is not currently manufacturing cars it continues to lose $100 million during each day of bankruptcy.
In a legal brief the Justice Department brief also argued that Fiat could demand a better deal if the current tentative agreement was nullified.
"If Fiat is released from the obligation to consummate the transaction as currently structured, it will be free to demand additional concessions before concluding a new agreement."
In a two-page order, the court said the disgruntled investors - a group of Indiana pension funds - had failed to show "that the circumstances justify" the stay placed on a lower court's approval of the deal.
"The temporary stay entered by Justice Ginsburg on June 8 is vacated," the court said.
The move paves the way for a Fiat-Chrysler tie up, which executives and the U.S. government hope will allow the venerable but bankrupt automaker to avoid liquidation.
The case was watched closely as a possible precedent for bankruptcy proceedings against General Motors which the U.S. government has also bailed out and ushered toward bankruptcy to allow a quick restructuring.
But while Tuesday's decision may have eased the government's immediate trepidation, some aspects of the Supreme Court's ruling will keep nerves on edge for GM's bankruptcy.
In considering the request for a stay, the high court explicitly said it was not deciding the merits of the underlying legal issues.
Losing millions each day
Italy's Fiat, one of Europe's biggest automakers, now is expected to take an initial 20 percent share in Chrysler, in return for sharing technology that can be used to build, smaller, more fuel efficient cars.
The U.S. Justice Department urged the Supreme Court to allow the deal, arguing that because Chrysler is not currently manufacturing cars it continues to lose $100 million during each day of bankruptcy.
In a legal brief the Justice Department brief also argued that Fiat could demand a better deal if the current tentative agreement was nullified.
"If Fiat is released from the obligation to consummate the transaction as currently structured, it will be free to demand additional concessions before concluding a new agreement."