U.S. Supreme Court justice Ruth Bader Ginsburg has granted a request to put the sale of bankrupt automaker Chrysler LLC to a group led by Fiat on hold. Ginsburg, in a one-sentence order, said the orders of the bankruptcy judge allowing the sale “are stayed pending further order of the undersigned or of the court.”
Ginsburg acted as a 4 p.m. deadline Monday from a U.S. appeals court in New York was due to expire. Indiana pension funds and consumer groups had asked the Supreme Court on Sunday to stop the sale of Chrysler while they challenged the deal. They argued the Chrysler sale unlawfully rewards unsecured creditors ahead of secured lenders and amounts to an illegal reorganization plan, and that the Treasury Department overstepped its legal authority by using bailout funds for Chrysler when Congress intended the money for banks.
The appeals court order would have allowed Chrysler to proceed with its sale to Fiat, a union-aligned trust and the U.S. and Canadian governments, reported Reuters. It was not clear if Ginsburg’s order was designed to give the high court more time to consider the dispute. Her order made no mention of when briefs in the appeal would have to be filed or whether the Supreme Court would hear the underlying legal challenge to the sale.
The Obama administration, earlier on Monday, urged the High Court to allow the sale, saying that blocking the deal would have “grave consequences.” DOJ Solicitor General Elena Kagan, the administration’s lawyer before the high court, said in a written argument that blocking the sale could force Chrysler’s liquidation.
The Chrysler case could set a precedent for GM, which is using a similar quick-sale strategy in its bankruptcy in New York, said the story.