Status of appeal: won, for now
A small group of creditors are appealing to the Supreme Court after their appeal was denied. One key creditor is a group of Indiana pension funds under the rule of elected official Richard Mourdock.
One of the judges noted that, under the TARP law, no interference with the Treasury’s “truly extraordinary” powers was possible unless there was a constitutional violation.
The bankruptcy court judge had said, in his opinion, that if Chrysler was liquidated, the creditors would get around half of what they stand to be paid from the proposed deal.
A Supreme Court stay of the sale could interrupt Chrysler’s current plans to start up some plants this month, and would probably prevent any fleet sales during June; it could also result in liquidation of both Chrysler and General Motors. This would likely be a severe setback to the economy.
The appeals court judges appeared to be confident there were no legal grounds to stop the sale.
Additional: the Detroit News reported that Chief Judge Dennis Jacobs asked Lauria and his colleagues, “What would the benefit be to your clients if this deal went away? You can’t wait for a deal from Studebaker.”
While Lauria claimed “This stands bankruptcy law on its head,” a Chrysler lawyer, Thomas Cullen said, “There are no other buyers.” Chrysler lawyers also told Detroit News that the company is losing $100 million a day while in bankruptcy.
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