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The Clock Is Ticking For Chrysler

The temporary stay order granted by Justice Ruth Bader Ginsberg blocking the Federal bankruptcy court administered sale of Chrysler to Fiat endangers the very survival of the three pension funds whose lawyers were able to get the stay granted. The fact of the matter is that Chrysler claims without a huge influx of cash and debt relief, such as the sale to Fiat, the company could be gone by mid-month. The Supreme Court needs to quickly decide on this Chrysler issue, otherwise the complete value of all pensions and investments in the company could be lost by some investors.

The fact of the matter is that the lawyers for three pension funds are worried about losing just $5 billion in investments. However, if Chrysler collapses within days if the Supreme Court fails to quickly act, the entire pension investments could be gone. Chrysler's situation may indeed be just that bleak.

In 1979, Chrysler needed a government bailout in order to survive when the company got caught with too many large cars, few small cars, and increasing gas prices. That bailout worked and allowed Chrysler to survive. But in 2009, a bailout by the government has not sufficed to keep Chrysler in business, bankruptcy protection plus the added cash influx of Fiat is need for the company to survive this time around.

Certainly bankruptcy protection makes many unhappy parties, as many creditors or investors now discover that they receive far less money than they had invested. And this is one of risks of the free market system. But the Federal bankruptcy action would be the best compromise compared to most creditors or investors losing just about everything.

Time is of the essence here. The Supreme Court cannot play around for months with this Chrysler issue. Chrysler may not have that much time.

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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Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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