Foes of Chrysler deal make new plea
on Jun 9, 2009 at 10:47 am
Indiana benefit funds trying to scuttle the sale of troubled automaker Chrysler tried on Tuesday to persuade the Supreme Court not to be rushed into allowing the deal to go ahead. In a short new filing (found here), the challengers cited new information that they said proved there was no real risk that the deal would collapse if not implemented by next Monday. Talk of such a risk “no longer provides a basis for driving the timing of these proceedings,” the new filing said.
The new information cited was a Bloomberg News story quoting an executive of Italian auto company Fiat — the spouse-to-be of Chrysler in the new transaction — that Fiat “would never walk away” from the deal. The filing contains a link to Bloomberg’s story.
The story describes a telephone exchange on Monday with Sergio Marchionne, chief executive officer of Fiat. Here is the key paragraph, cited in the new filing:
” ‘We would never walk away,’ Marchionne said in response to a question about whether Fiat would pull out of the deal if it isn’t completed by the June 15 deadline. ‘Never.’Â Rather, Marchionne said that ‘We should just be patient and let the system work.’ ”
The funds told Justice Ruth Bader Ginsburg, who is currently considering their plea for delay of the transaction, that they were responding to claims by the U.S. government and Chrysler that the deal had to be closed by June 15 or, as the new filing put it, “Fiat would exercise its right to withdraw and the entire transaction would collapse.”
This is what the government, in Monday’s filing by U.S. Solicitor General Elena Kagan said: “Granting a stay beyond Monday, June 15, jeopardizes the sale — the only remaining alternative to the outright liquidation of Chrysler. 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….In earlier stay proceedings brought in the district court, Fiat explained that it was already concerned about the depreciating value of Chrysler’s assets and that further delay would create a direct risk that the transaction would unravel…Against the bankruptcy court’s findings and Fiat’s own explanation, applicants [the funds] offer no basis for optimism that Fiat will remain at the table, while Chrysler’s assets depreciate and further rounds of litigation continue, if a stay is granted and the sale is not consummated by the current deadline.”
Chrysler, in its response filed Sunday, said that the billions put up by the U.S. and Canadian governments to facilitate the sale “is expressly conditioned on the Fiat Sale proceeding promptly, with Fiat, as a matter of business judgment, setting the date for closing as no later than June 15, 2009.”
