Chrysler closer to emerging from bankruptcy

Chrysler poised to close sale, exit Chapter 11

NEW YORK (AP) — Chrysler was a step closer to emerging from bankruptcy protection Wednesday, a day after opponents of the automaker’s planned partnership with Italy’s Fiat exhausted their appeals in an effort to halt the Obama administration-backed sale.

Late on Tuesday, the Supreme Court cleared the way for the sale of the bulk of Chrysler LLC’s assets to Fiat Group SpA, rejecting an appeal by a trio of Indiana pension and construction funds, consumer groups and others to block the transaction.

The deal will likely close early Wednesday, according to a person briefed on the company’s plans who declined to be named ahead of an official announcement by the automaker. Chrysler released a statement late Tuesday saying it expects the sale to close “very shortly.”

The high court’s action came on the heels of statements by Chrysler and Fiat that their deal would automatically expire if the sale didn’t close by June 15 and a White House warning that there was no guarantee a new agreement could be brokered in time to save Chrysler from liquidation.

The sale of Auburn Hills, Mich.-based Chrysler’s assets to Fiat had been expected to close more than a week ago, but Supreme Court Justice Ruth Bader Ginsburg decided Monday to delay the sale while studying the appeals.

A federal appeals court in New York had earlier approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene. The Indiana funds, which hold less than 1 percent of Chrysler’s secured debt, claimed the sale unfairly favors Chrysler’s unsecured stakeholders such as the union ahead of secured debtholders like themselves.

Justice Ginsburg ordered a temporary delay just before a 4 p.m. deadline on Monday. Chrysler, Fiat and the Obama administration warned that the high court’s intervention could scuttle the sale.

Early Tuesday, the pension plans seized on comments from Fiat officials that they would not walk away from the deal even if June 15 were to pass without completing the sale. The plans tried to persuade the justices that there was no reason to rush to meet that deadline. But Chrysler, Fiat and the Obama administration stressed in response that Chrysler was losing $100 million every day its plants remain closed and that the deal would automatically terminate in less than a week, with no guarantee that a new agreement would be reached.

If the closing is delayed by more than 10 days, the government will need to “either to increase its overall funding to the detriment of taxpayers, or abandon its role in the transaction,” the administration said.

Late Tuesday, the Supreme Court turned down the opponents’ last-ditch bid. The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.

“The applicants have not carried that burden,” the court said.

The court did not consider the merits of the opponents’ arguments, only whether to hear their full-blown appeal.

Indiana Treasurer Richard Mourdock expressed disappointment with the decision and said options seem limited for opponents of the sale.

“Obviously the supreme court of the land is the supreme court of the land,” Mourdock said. “The United States government has, I continue to believe, acted egregiously by taking away the traditional rights held by secured creditors.”