Wednesday, June 10, 2009

US court clears way for Chrysler-Fiat deal

The US Supreme Court has cleared the way for the sale of ailing automaker Chrysler to Italy's Fiat, lifting a stay placed on the deal a day earlier.

In an order handed down late Tuesday, the court said the creditors who had sought a delay for the deal to be reconsidered had not shown that such a move was necessary.

Chrysler is seeking to emerge from bankruptcy in what would be record time - 30 to 60 days - as part of White House-backed efforts to rescue it from the dual devastation of the recession and years of making cars that few wanted to buy.

A group of creditors, led by three Indiana pension funds, had appealed the bankruptcy court ruling that approved the sale on the grounds that it would cause them "irreparable harm".

Chrysler has offered its creditors $2 billion in cash to forego about $7 billion in debt. But some bondholders believed they were getting a poor deal and hoped for liquidation. The Indiana pension fund that appealed the court's ruling is owed about $42 million.

The New York appeals court turned down the creditors' appeal Friday, but granted a stay until 2000 GMT Monday so they could appeal to the high court.

On Monday, Justice Ruth Bader Ginsburg had postponed the sale in a stay order, "pending further order".

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