U.S. Supreme Court Justice Ruth Bader Ginsburg issued a stay in the Chrysler hearing, delaying its proposed sale to Fiat.
The Supreme Court extended the current stay on the sale to hear arguments against the merger, at the behest of groups that comprise Chrysler’s senior secured lenders. The primary opponents of the deal include three Indiana employee pension funds, the widow of a Chrysler employee and several consumer advocacy organizations who filed emergency applications to the Supreme Court Saturday.
The stay will allow the court to vote on whether or not the matter should be heard. The senior secured lenders need five justices to vote in favor of hearing the case. The court had the option of issuing a ruling or letting the deadline pass without ruling on the matter.
Now, the decision by Ginsberg may prove to be critical or it may prove to only delay the inevitable. Ginsberg could still decide to let the sale go through tomorrow. She could have the court look at the matter, and the full court could decide not to look at the case (and thus the sale could go through). It could also take a look at the case which would be critical.
By pure coincidence, because this case originated out of the district that Ginsberg serves, it was Ruth Bader Ginsberg that initially decided whether the Supreme Court should intervene. That she decided to issue the stay is of interest because one would have assumed she would have sided with Chrysler.
The issue stems from a group of pension funds represented by the state of Indiana. The state believes that they, the secured creditors, were leap frogged by unsecured creditors when the bankruptcy was structured. Furthermore, the state of Indiana is arguing that TARP funds can't be used for auto bailouts in the first place.
So, there are two potential arguments that the court could hear. If Chrysler loses on either, their entire bankruptcy deal would be in jeopardy. Right now, Fiat can pull out of the deal if it isn't finalized by the 15th of the month. Of course, given that Fiat isn't putting in any capital into the deal, one could argue that Chrysler could come out of the bankruptcy without them.
If the Supreme Court rules the federal government overstepped their bounds, that would have reverberations throughout our economy and politics. That would put in jeopardy not only the bankruptcies of Chrysler and GM, but the entire domestic agenda of the Obama administration.
Many, like me, believe that the administration has gone way beyond their Constitutional authority. By imposing their will on a private bankruptcy they have exerted power the Constitution never intended for them. If the Supreme Court were to rule against them on either point I mentioned earlier, they would agree with that view.
Folks like me believe that the President and his administration are totally out of control and drunk on power. The only branch that can stop them now is the judicial branch. This may just be the case to finally put that power in check. On the other hand, tomorrow the court may decide not to even hear the case.