Supreme Court Issues Stay Against Chrysler Bankruptcy

by Sal on June 9, 2009

in Economy,Judicial Watch,Politics

The Supreme Court issued a stay on the Chrysler bankruptcy ruling yesterday afternoon, shortly before a court of appeals imposed deadline would have made the deal final.  The Chrysler bankruptcy, engineered by the Obama administration, would have engineered a sale of Chrysler to Italian automaker Fiat, and paid off the unions at the expense of the bondholders who owed Chrysler some debt.  The ruling also closes over 700 Chrysler dealerships, mostly owned by donors to the GOP.

The stay, issued solely by Justice Ginsburg, is not a final ruling.  Four members of the court must agree to take the case, and a majority ruling must be made to stop the bankruptcy deal for any changes to occur.  The Court traditionally has stayed out of government economic policy, but the quick timetable imposed by the second circuit (they ruled on Friday and gave the court until Monday at 4:00 PM before the deal was finalized) may have caused Ginsburg to issue the stay pending further review.  The challenge, brought on behalf of the Indiana Pension Trust, one of the primary creditors, alleges undo damages done from the bankruptcy deal, and the misuse of TARP funds.  The Obama administration has not responded to the damages claim, but is arguing that the Indiana Pension Trust does not have standing to challenge the usage of TARP funds, and in this they may be right.

While the court overturning the bankruptcy court’s ruling is far from certain, it does show that the court will not subject itself to the “sense of urgency” claim filed by the administration and the lower courts.  The court will review the case and see if it has merit, and decide whether to hear arguments or not.  In any case, it is a small first step for those of us who believe that the Chrysler deal is a sham, and that the government has no role in these matters.  I don’t hold out much hope for the final outcome, but I do take some small pleasure in even this temporary stay.

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