The US Supreme Court allowed the sale of Chrysler to a group led by Fiat to go ahead, as it rejected on Tuesday an appeal by three Indiana pension funds that requested the deal be put on hold.
The decision came after the US government and Fiat issued stark warnings that Chrysler would go out of business by next week if the deal was delayed.
Chrysler said after the decision was announced that the deal with Fiat was expected ??to close very shortly?. It added that ??the new company will build upon Chrysler??s proud history of innovation and Fiat??s complementary technology and expertise to expand Chrysler??s product portfolio in the US, Canada and overseas.?
Chrysler??s plants have been closed since the carmaker filed for Chapter 11 protection on April 30. With revenues at a virtual standstill, the car manufacturer has been bleeding about $100m in cash a day. It plans to restart production over the next few weeks.
Richard Mourdock, the Indiana state treasurer who sought to delay the sale, expressed disappointment at the decision. The three funds, which hold $42m of Chrysler??s $6.9bn in secured debt, argued that an offer to pay them 29 cents on the dollar violated their creditor rights, since a United Auto Workers union healthcare trust ?? a more junior, unsecured creditor ?? will receive far more favourable treatment under the restructuring, including a 55 per cent equity stake.
The Supreme Court said that its denial of the Indiana funds?? application ??is not a decision on the merits of the underlying legal issues?.
But it added that ??the party requesting the stay bears the burden of showing that circumstances justify an exercise of discretion. The applicants have not carried that burden.?
