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Breaking News: The U.S. Supreme Court Puts The Brakes On Chrysler Sale To Fiat

The U.S. Supreme Court according to a stay order by Justice Ruth Bader Ginsburg put at least a temporary stay on the sale of Chrysler to Fiat. The negotiations with Fiat have been extremely delicate, and if this situation drags out for days, Fiat could potentially back out. Fiat has been viewed as a somewhat unwilling partner here, not totally excited about the prospects of buying the ailing Chrysler company. All of this leaves this situation up in the air and Chrysler's future once again cloudy.

On behalf of three pension funds that had some investment in Chrysler, Ginsburg's stay on the sale to Fiat gives these bondholders some hope for their interests. However, if Chrysler should fail completely, bondholders could be left with nothing. Bondholders are taking some risk here.

Lawyers for the bondholders are questioning the legality of the sale of Chrysler that has been managed by the Federal government. The main legal question seems to be whether the Obama Administration has the legal grounds to act as they have in managing the sale of Chrysler to Fiat and in rescue plans for a private American company.

Some past legal decisions by the Supreme Court during the FDR years related to his economic revival plans during the Great Depression put the brakes on some of his plans. So the Obama Administration may be facing a similar tug of war with the courts as the administration seeks to work for the survival of Chrysler.

The last chapter hasn't been written on this entire saga about Chrysler yet.

Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!

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Comments (1)


I think what the Obama Administration is doing is patently illegal. Maybe the Fiat deal is best for Chrysler but things still have to be done legally if only to protect private investment in this country because it will be the private sector that will lead us to any economic recovery. If investors are scared that their rights may not be observed they may just choose not to invest in any company - particularly if that company's employees are unionized. This could have interesting ramifications for the GM bankruptcy if the SCOTUS sides with the bondholders. The government just cannot rewrite contracts like this no matter what their intentions are.


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