Administration: Let Chrysler sale proceed

June 8, 2009 at 11:53 AM
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WASHINGTON, June 8 (UPI) -- The Obama administration asked the U.S. Supreme Court Monday not to block the impending sale of Chrysler LLC to Fiat, despite a number of challenges.

An order granting or denying a stay is expected by 4 p.m., the time limit set by a lower court for the challengers to get Supreme Court action.

Three Indiana state pension funds are challenging the sale, saying it will devalue their claims on the bankrupt Chrysler, and they have been joined by individuals and groups who also challenge the sale. All the challengers are asking the Supreme Court for a stay until the justices can hear arguments and rule on the merits of the case.

But U.S. Solicitor General Elena Kagan said the challengers have no standing to make their request.

"The (lower) bankruptcy court specifically found ... as a practical matter, the sale (to Fiat) that it approved is the only feasible alternative to liquidation of Chrysler's assets," she said. The bankruptcy court's findings "were central both to (that) court's determination that (the challengers) lack standing to challenge the use of (Treasury funds) and to the ... ultimate decision to approve the sale."

Kagan said the challengers "make no meaningful effort (in their briefs) to show that either of those findings is wrong, much less to demonstrate that review of those findings is an appropriate use of this (Supreme) Court's resources."

Chrysler is losing about $100 million a day as its factories lie idle, she said, and Fiat has expressed concern about the company's deteriorating condition.

"Granting a stay beyond Monday, June 15, jeopardizes the sale -- the only remaining alternative to the outright liquidation of Chrysler," Kagan wrote. "The Master Transaction Agreement sets June 15 as the deadline for the proposed sale to close. After that date, Fiat has the right to walk away."

Any potential injury to the challengers "pales by comparison to the harms to (all the Chrysler) debtors and the public interest," Kagan said, adding that the "speculative" harm to the challengers "cannot outweigh the much graver prospect of losses many times that sum that Chrysler, its stakeholders and the American and Canadian economies would suffer if the last remaining alternative to Chrysler's liquidation is foreclosed."

Kagan also points out the high hurdles facing any request for a Supreme Court stay.

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