Ginsberg halts sale of Chrysler pending further order

[masuki bance]

Supreme Court Stalls Chrysler-Fiat Deal

June 8, 2009; 4:15 PM ET

The Supreme Court ruled moments ago that Chrysler cannot yet sell most of its assets to Fiat, a move that has been opposed by three Indiana state pension and construction funds.

The ruling grants a stay in the sale as the court gathers more data. The court has not decided whether to schedule a hearing on the matter.

It temporarily blocks the way for Chrysler to complete its merger with the Italian automaker and begin its new, post-bankruptcy life.

The U.S. favors the Chrysler-Fiat merger and wants to remove the Indiana road block.

"I'm delighted it appears we will be getting our day in court," Indiana state treasurer Richard Mourdock said in an interview on CNBC.

Here's the text of the statement from Associate Justice Ruth Bader Ginsburg:

"UPON CONSIDERATION of the application of counsel for the applicants, and the responses filed thereto,
IT IS ORDERED that the orders of the Bankruptcy Court for the Southern District of New York, case No. 09-50002, dated May 31 and June 1, 2009, are stayed pending further order of the undersigned or of the Court."

http://voices.washingtonpost.com/economy-watch/2009/06/supreme_court_holds_up_chrysle.html?hpid=topnews

Why do the pension funds want this delay?

[SuperTrouper]

1. I am not sure but perhaps Justice Ginsburg

wants to make sure that all judicial remedies are exhausted before allowing this merger to go through.

[DCBob]

5. Yes, I think she is taking this issue seriously and...

does not want to appear to just be giving the ruling that everyone expected.

[chicago legal pro]

2. The pension funds want the delay because they are getting ripped off

In this deal. The employees who get funds from the pension funds will be getting ripped off if this deal goes through. But as long as the banks get theirs who cares about the workers anyway.

[LiberalFighter]

3. The pensioners are not being ripped off by the deal.

Indiana is ripping off the pensioners because of their incompetence when they bought the stock. And held onto it.

[chicago legal pro]

7. Stock is not involved in this deal.

The pension funds did not hold any of it.

[Abq_Sarah]

9. They bought bonds

Secured bonds. Backed by collateral. During bankruptcy, secured bonds are paid out first. That's what they're upset about. The normal laws aren't being followed.

[Thrill]

4. No they aren't. If Chrysler is liquidated. They wouldn't get as much as they are getting now.

[chicago legal pro]

6. Untrue.

As bondholders they would get the value of liquidated assets which is more than the few cents on the dollar they have been offered. That's why Justice Ginsberg put a hold on the deal. It is a ripoff.

[Thrill]

8. Thats not why she put it on hold

.

[chicago legal pro]

10. She gave no written opinion

I am not in her head. Are you?

[grantcart]

11. I presume that they would have to repay the US loans first and there would be no

liquified assets after that.

[chicago legal pro]

12. I believe the financial analysts advising the pension plans

know more about the consequences of litigation and possible liquidation than people posting on DU.

[grantcart]

13. so are you saying that bond holders will get paid before the secured loans of the US Government?

I presume that the leading legal authorities in the AG's office would make sure that they would be first in line.


The Indiana Bond attorneys that you refer to actually account for only 1% of the bond holders.


So holding with your rather superficial logic, which kind of negates the purpose of public discussion, I am in agreement with 99% of the bond holder attorneys who know more than you do while you are in agreement with 1% of the bondholders who are smarter than me.


I like those odds.

[chicago legal pro]

14. You know I didn't say that and anyone who reads the post does too.

I said the pension funds feel they will get a better deal in litigation -- wherever that may lead to -- than accepting the deal they have been offered. They obviously believe that or they would not litigate. I think they are correct.

[grantcart]

15. Only 1% of the bondholders have signed on to the case before the court

The other 99% do not agree with the legal action and agreed to the settlement.


I applied the narrow logic you provided.


You are ignorant of the facts involved and your logic is thin.

edited for spelling

[Romulox]

19. The general rule for secured debt is "first to record" has priority.

The US government loans therefore would be subordinate to the secured claims of these bondholders. This rule can change while IN bankruptcy (i.e., post bankruptcy financing may be granted priority over pre-filing debts,) but the US government loans were made prior to any filing.

So no, the government debt most likely is NOT "first in line".

[grantcart]

20. the "first to record" would only apply to bonds of the same kind.

Are you saying that the money loaned to the companies by the USG is at the same or less level of security as the other bond holders?


Since the government makes the rules I would assume that they would always include a 'move to the front of the line rule'.


The fact that 99% of the other bond holders have not joined in the suit would seem to indicate that they did not think that they have very good standing to get their money before the government IMHO.

[Romulox]

21. No, that's not right.

"Recording" has to do with establishing priority as to any particular piece of collateral. One can't give someone a first position security interest in a piece of property, then turn around and sell a "superior" class of bond that trumps that first priority position (except with the secured creditor's consent.)

"Are you saying that the money loaned to the companies by the USG is at the same or less level of security as the other bond holders?"

I'm saying there is no such concept as the "same or less level of security".

"Since the government makes the rules I would assume that they would always include a 'move to the front of the line rule'."

Those rules are called "the US Code" and "the Uniform Commercial Code". They're pretty clear in this matter.

[HamdenRice]

16. NPR reported this AM the suit is a political stunt by a right wing Republican pension fund manager

It was brought by a Republican state pension fund manager and politician whose pension has little invested in the bonds.

Even chicken-shit NPR suggested that this is a political stunt to make the auto maker bailout fail, so that they can then claim Obama's economic policies are failing.

They don't care how many auto workers they cause to be unemployed by preventing this from going forward.

This is economic treason, pure and simple.

[chicago legal pro]

17. So Justice Ginsberg is guilty of treason?

Are you calling for her death or just impeachment?

[HamdenRice]

18. Don't be silly

Justice Ginsberg just issued a stay. You know what this is, right "legal pro"?

I'm saying that the pension fund that brought the suit had little money invested in the automaker and wants to prevent the deal from going forward in order to score political points. He knew that Fiat had a deadline for the deal closing. If Fiat walks away, as NPR reported, the company will be liquidated and Obama will "fail" at saving UAW jobs.

That's killing jobs to score political points.

[OldBlueDem]

22. Seems Routine to Me

The Pension Fund has a legitimate argument (I think the TARP funds argument that it is making is not a good argument--at least it is not ripe and the Pension Fund is probably not the property party in interest to make it). However, section 363 sales happen all the time and secured lenders are often forced to take an involuntary haircut.

Justice Ginsberg handles emergency matters coming out of the 2nd Circuit and I think the stay is just routine. The appeal was argued this past Friday, the 2nd Circuit ruled that day and issued its own stay until the following Monday afternoon. The Supreme Court does not usually work on such an expedited schedule, and my guess is that Justice Ginsberg issued the stay to allow all of the justices to review the matter and then see if there are a sufficient number of votes in favor of granting cert. I doubt there are four votes there, but who knows. I would bet that the stay will be lifted on Friday, allowing the deal to close by the Monday deadline.

[Romulox]

25. Doesn't a court usually stay implementation of its own ruling pending appeal?

Generally, this is routinely done...

[chicago legal pro]

23. Yes I do know what a stay is

I also know that issuing a stay is not required and is usually turned down without comment by the court. That means that she saw some issues in the case where she wanted more time to investigate or she wanted the full court to look at the case. The pension fund has 17 million invested and stands to lose 5 million of that if standard precedent is not followed.

[HamdenRice]

24. And how much will they lose if Chrysler is liquidated?

From most accounts, even more. The guy was interviewed on NPR and his own explanation was quite ideological. So this Republican pension fund manager is willing to screw auto workers and violate his fiduciary duty to his own beneficiaries in order to carry out a political stunt to cause the bailout and Fiat merger to fail.