Bailout Watch 550: Chrysler Sale Delayed By Supreme Court

by Edward Niedermeyer

Published: June 8th, 2009

bailout watch 550 chrysler sale delayed by supreme court

Supreme Court Justice Ruth Bader Ginsburg has ordered that the sale of Chrysler to Fiat is “stayed pending further order,” reports the AP. “Was TARP money used illegally?” asks the WSJ Deal Journal. It won’t be easy to prove, is the professorial opinion. Oh, and did we mention that the Obama administration has filed a brief ( PDF via the excellent scotusblog) against the initial plea, arguing that TARP issues are out of bounds for the courts? Meanwhile, Fiat’s walk-away deadline of the 15th draws closer every minute. Hit the jump for Bader-Ginsburg’s inscrutable order (and more! Thanks for the tips!).

UPON CONSIDERATION of the application of counsel for the applicants, and the responses filed thereto, IT IS ORDERED that the orders of the Bankruptcy Court for the Southern District of New York, case No. 09-50002, dated May 31 and June 1, 2009, are stayed pending further order of the undersigned or of the Court.

TTAC contributer Richard Tilton tells the Wall Street Journal:

“We will probably see a request from Chrysler for an expedited briefing on whether the court should hear the appeal. The Supreme Court must still decide if they want to hear the appeal. I think this will now cast doubt on how the government is trying to restructure General Motors through the bankruptcy process.”

Scotusblog mulls the possibilities:

“Ginsburg or the Court may be waiting to see how the Second Circuit explains its decision to uphold the terms of the sale. The Circuit Court issued no opinion on Friday, indicating that such an explanation would come “in due course,” although the expectation was that one or more opinions would emerge from those judges on Monday.”

“The wording of Ginsburg’s order — “stayed pending further order” — is the conventional way by which a Justice or the Court carries out an action that is expected to be short in duration, and not controlling — or even hinting at — the ultimate outcome. Any speculation that her order meant the Court was leaning toward a further postponement would be unfounded.”

Edward Niedermeyer

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2 of 36 comments

MPad1 on Jun 09, 2009

This is also an issue of trust and honesty. The rule of law implies a level of trust between businesses, investors, workers, etc. as to how interactions should occur. Once the government (or any other party) breaks that trust, there are ripple effects that go beyond the smaller boundaries of this one situation. It's no different than when businesses interact without the government. Trust and honest matter. (For more thoughts: Honesty in Marketing.)

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U mad scientist on Jun 09, 2009
The rule of law implies a level of trust between businesses, investors, workers, etc. as to how interactions should occur. Once the government (or any other party) breaks that trust, there are ripple effects that go beyond the smaller boundaries of this one situation. It's no different than when businesses interact without the government. Trust and honest matter. There's another more important angle to the trust issues here. When we get "news" from our sources, we need to trust they're being honest with us. For example, when they tell us the government breaks the law, and it turns out they were lying, it's customary to stop trusting such sources. For some reason, certain people aren't bothered by this at all. They continue to hold onto the lies. So as you can see, trust often doesn't matter as much as stubborness.

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