Patterico's Pontifications

6/8/2009

Supreme Court Delays Chrysler Sale

Filed under: Government, Judiciary — DRJ @ 2:07 pm

[Guest post by DRJ]

Supreme Court Justice Ruth Bader Ginsburg has entered an order staying the Chrysler sale to Fiat “pending further order.” This appears to be a short-term hold, perhaps to give Justice Ginsburg and the Court more time to consider the law and pleadings.

– DRJ

44 Comments

  1. Great news! Any delay of this sale can only be a good thing.

    Comment by h2u — 6/8/2009 @ 2:10 pm

  2. Judge Napolitano of Fox, reading the “tea leaves”, believes a much longer stay is almost a given, and a full hearing is likely, as Ginsburg likely would not have signed the stay extension without first having taken the temperature of her peers.

    Only four are needed to have the hearing, per one of the the plaintiffs, the Indiana Treasurer. Scalia, Thomas, Alito should be three. The fourth? How gutsy is Roberts? Fingers crossed.

    We’ll know by this time tomorrow.

    Comment by Ed from SFV — 6/8/2009 @ 2:36 pm

  3. Die Chrysler Die

    Comment by Kevin Murphy — 6/8/2009 @ 2:39 pm

  4. Amazing. But give credit where it’s due.

    Ginsberg actually managed to do the right thing (making everyone stop to think), and I hope not for the wrong reasons.

    Comment by Dr. K — 6/8/2009 @ 2:57 pm

  5. Remember, if the deal isn’t done by the 15th, FIAT has the option to walk. The only skin in this game is the WH and the UAW – they desperately need this deal to go through. FIAT’s not putting up any dough, and all of the bond (mostly) and stock holders are being wiped out.

    Comment by AD - RtR/OS! — 6/8/2009 @ 3:08 pm

  6. We can only hope this disastrous plan will be found unconstitutional. I pray that.

    Comment by Vivian Louise — 6/8/2009 @ 3:15 pm

  7. Count me in as well regarding those sentiments – the government has forced a shotgun marriage of two terrible automotive companies, all in service to their patrons at the UAW. One can only hope that the rule of law will also apply to the GM fiasco – I was talking to two of my friends last night (huge lefties) and even they think these deals are assinine by any stretch, and they’ll never buy a car from either one of them in the future.

    Comment by Dmac — 6/8/2009 @ 3:24 pm

  8. AD – Since Fiat isn’t putting up any scratch, I think their drop dead date is a bunch of hooey just to scare people into getting the deal done without looking at it closely, kind of like the Stimulus Bill.

    Comment by daleyrocks — 6/8/2009 @ 3:31 pm

  9. Boy, a liberal justice doing something (even temporarily) that conservatives like. So is Ginsberg the judicial activist we usually deplore, ruling from the bench, substituting her judgment for that of our duly elected representatives? Or is she to be lauded for standing guard against an unconstitutional power play?

    As I’ve said, it all depends on whether one likes the end result.

    And if this gets that far, I suspect the ‘conservative’ justices will mostly decline to get involved or will rule against the creditors. I can’t wait to hear the vitriol aimed at Scalia, Thomas, Roberts and Alito.

    Comment by steve sturm — 6/8/2009 @ 3:43 pm

  10. Personally, I think Chrysler (read: UAW), and the WH, need this deal much more than FIAT does.
    If Chrysler has to liquidate, all sorts of interesting things could happen.

    Comment by AD - RtR/OS! — 6/8/2009 @ 3:44 pm

  11. Ginsberg issued the stay because that’s what justices do when they know their opinion might be in the minority. Check back in a day or so, when the justices have voted on whether to hear an appeal (no doubt quickly). If there are four votes, the stay will hold, otherwise it will be lifted.

    Comment by Kevin Murphy — 6/8/2009 @ 4:01 pm

  12. Steve–

    Which duly-elected representatives are you taking about? This is a judicial questions (BK court) or a legislative question (authorization of funds), yet the decisions all seem to come for the executive branch. Hardly activist to insist on separation of powers.

    Comment by Kevin Murphy — 6/8/2009 @ 4:04 pm

  13. A little caution on the euphoria. Other reporting suggests that the volume of briefing that started to come in on Saturday night was enormous. The fact that she issued the stay just before 4:00 pm might suggest that the Court was unable to digest everything in so little time. Also, the 2nd Cir. issued no opinion when it declined to halt the sale, saying that it would do so in “due course”. That put SCOTUS in the position of not knowing what it was being asked to review.

    It would be the 2nd Cir.’s decision that would be subject to SCOTUS review. The fact that the 2nd Cir. didn’t put anything in writing is where the WH and other backers of the plan should be pointing fingers.

    Comment by Shipwreckedcrew — 6/8/2009 @ 4:22 pm

  14. On an unrelated note:

    The GOP has found 2 NYS Senators to defect from the Democrat party to give them back the majority.

    One of the reasons was:

    Espada, Monserrate, Diaz and Sen. Carl Kruger of Brooklyn challenged the nascent majority immediately, threatening to side with Republicans if the Democratic conference didn’t give them specific leadership posts and policy considerations, including a promise that a same-sex marriage bill never reach the floor.

    http://www.nypost.com/seven/06082009/news/regionalnews/gop_takes_control_of_state_senate_173215.htm

    Comment by Dr. K — 6/8/2009 @ 4:25 pm

  15. Dr. K – Those guys come with a little baggage attached though.

    Comment by daleyrocks — 6/8/2009 @ 4:31 pm

  16. If this action delays the F(ix) I(t) A(gain) T(ony) deal, Chrysler might not be able to do Chapter 11; it could go Chapter 7, which would be a disaster for the Administration and the UAW. Then the Administration puts more money into Chrysler, and folds it into Government Motors.

    I never could see how this deal could ever have worked for Fiat in the first place. Chrysler was smaller than Ford and GM because Chrysler didn’t have attractive products, for the most part, and the two attractive products they do have — Jeep and Dodge Trucks — are junk.

    Comment by The economist Dana — 6/8/2009 @ 4:42 pm

  17. Does anyone else see a problem with the math here:

    Earlier Monday, however, Solicitor General Elena Kagan argued strenuously against a stay. “Blocking the transaction would undoubtedly have grave consequences,” Kagan wrote.

    “Chrysler is losing more than $100 million per day,” Kagan wrote. “Every day that Chrysler remains in bankruptcy without consummating the sale threatens to postpone the resumption of production even further and to prolong the period of $100-million-per-day losses.”

    http://www.politico.com/news/stories/0609/23497.html#ixzz0Ht4t5hba&D

    $100 million a day would be $3 billion a month, $12 billion a quarter, $36 billion a year.

    Now, compare Kagan’s projections to Chrysler’s projected 2009 losses at the time it entered into bankruptcy earlier this year. Chrysler, which lost $16.7 billion in 2008, projected at the time of it’s filing that it would lose another $4.7 billion in 2009.

    http://www.foxbusiness.com/story/markets/industries/transportation/chrysler-expects–billion-loss–wsj/

    So, the Obama Administration has guided Chryler from a projected daily loss of around $12 million, to an actual daily loss of $100 million.

    Either that or Elena Kagan is very sloppy with her numbers.

    Now, ON TO HEALTH CARE!!!!!

    Comment by Shipwreckedcrew — 6/8/2009 @ 5:32 pm

  18. Holy cow — did I say $36 billion a year????

    How about $48 billion a year.

    Comment by Shipwreckedcrew — 6/8/2009 @ 5:33 pm

  19. Does anyone else see a problem with the math here:

    Why do I think Justice Ginsburg does?

    Comment by nk — 6/8/2009 @ 5:59 pm

  20. Don’t get excited yet, the other reason I’ve seen proffered for a stay of this nature is to give time for writing dissents from denial of cert.

    Comment by Soronel Haetir — 6/8/2009 @ 6:07 pm

  21. The math problem is easily explained by Leviticus’ Add Three Zeros to Precedent Rule.

    Comment by DRJ — 6/8/2009 @ 6:07 pm

  22. 15 – daleyrocks, yeah, they have baggage, but politics makes strange bedfellows. If they really give the NYS GOP the majority in the Senate, then we get away from 1-Party Rule.

    It’s not much, but I’ll take it.

    Comment by Dr. K — 6/8/2009 @ 6:12 pm

  23. Note well that one of the government arguments was that the Court had no jurisdiction in this issue, and that Treasury could rule by fiat (pun intended).
    I wonder if Geithner will just ignore the stay and sell regardless.

    After all, that is the Chicago way.

    Comment by great unknown — 6/8/2009 @ 6:14 pm

  24. Gee, wouldn’t that be in violation of his oath of office?

    But such quaint practices don’t really mean anything, do they?

    Comment by Dr. K — 6/8/2009 @ 6:34 pm

  25. A bigger violation than threatening another bondholder group with perpetual IRS audits if they didn’t capitulate and withdraw their lawsuit?

    Comment by great unknown — 6/8/2009 @ 6:37 pm

  26. I hope the administration acts as though they do not have to obey the court. It would tickle me to no end to watch the democrats have to impeach their own President.

    Comment by Zelsdorf Ragshaft III — 6/8/2009 @ 6:48 pm

  27. Guess it’s time to dust-off that old court-packin’ scheme again.

    Comment by AD - RtR/OS! — 6/8/2009 @ 7:26 pm

  28. Dr. K @22 – It’s great to get the majority back. Don’t get me wrong. Those guys just shouldn’t get embraced too warmly since they already been publicly slammed by their new colleagues and may have their butts thrown out of the Senate.

    Comment by daleyrocks — 6/8/2009 @ 8:07 pm

  29. There’s something I don’t understand about the district court decision, which the 2nd Circuit let stand: How in hell can creditors in a bankruptcy not have standing?

    The district court dismissed their suit because he said they didn’t have standing. If creditors don’t, who in hell does have?

    Comment by Steven Den Beste — 6/8/2009 @ 8:28 pm

  30. Steven – I think one of the issues was whether TARP money could be used for the Chrysler reorg since it was not a financial institution. Since the creditors were not directly receiving TARP funds, I believe the Judge ruled they had no standing, but I could be way off base.

    Comment by daleyrocks — 6/8/2009 @ 8:33 pm

  31. The district court dismissed their suit because he said they didn’t have standing. If creditors don’t, who in hell does have?

    The pension funds are an extreme minority of the bond holders. I’m not sure if the figure is 2/3 or 70% but if you get a majority of the creditors onboard dissenting lenders are out of luck. That is where they would lack standing. Their only real chance to get past that is to win on saying the TARP recipients were coerced.

    Comment by Soronel Haetir — 6/8/2009 @ 8:38 pm

  32. Steven Den Beste,

    While I think daleyrocks is close, standing can be complicated and I think this Hans Bader article is helpful.

    Comment by DRJ — 6/8/2009 @ 9:02 pm

  33. If Bush had tried this the Congress would have impeached him in a second … The Obama Administration argued Monday that no court, including the Supreme Court, has the authority to hear a challenge by Indiana benefit plans to the role the U.S. Treasury played in the Chrysler rescue, including the use of “bailout” (TARP) funds. The Indiana debt holders, U.S. Solicitor General Elena Kagan wrote, simply have no right to raise that issue, thus putting it out of the reach of the courts.

    Comment by Neo — 6/8/2009 @ 9:45 pm

  34. Neo, the Supreme Court doesn’t have jurisdiction over God, donchaknow?

    Comment by Steven Den Beste — 6/9/2009 @ 12:00 am

  35. 34 – Funny, they seem to think they do, with the “separation of church and state” stuff.

    Comment by Dr. K — 6/9/2009 @ 2:14 am

  36. Fiat’s CEO said they wouldn’t walk on June 15th and he’d wait to see the system work (his words). But if they walk, what then? I keep hearing all about the unions. Last time I checked Chrysler and GM employ just as many non-union employees. I keep hearing lots of complaints from the right but what I don’t hear are alternatives being offered…

    Comment by JEA — 6/9/2009 @ 3:44 am

  37. Non-union employees are better able to find employment in other fields than union employees. Mechanical engineers can be readily retrained for all those “green” jobs we hear so much about.

    Turning the same bolt day after day for 20 years really prepares you for the information era.

    Comment by Dr. K — 6/9/2009 @ 4:05 am

  38. JEA – why do you approach this as a policy debate? This is about cowboy unilateral imposition of government in the private sector, to apparently save the UAW.

    Comment by JD — 6/9/2009 @ 4:42 am

  39. Dr K wrote:

    Turning the same bolt day after day for 20 years really prepares you for the information era.

    Well, someone has to teach the “righty tighty, left loosey” to shop classes!

    Comment by The educationalist Dana — 6/9/2009 @ 4:46 am

  40. JD

    YEP – interesting that the most lefty idiologue (okay argueably) on the court stopped this

    Its still heartening that in a lefty America thee still is your day in court

    Comment by EricPWJohnson — 6/9/2009 @ 5:02 am

  41. The Supreme Court has lifted the stay.

    Comment by James B. Shearer — 6/9/2009 @ 5:18 pm

  42. Which apparently makes people like Mr. Shearer happy that the government is inserting itself where it does not belong, and has strong-armed and intimidated legitimate secured creditors in order to pay off the political cronies in the UAW.

    Comment by JD — 6/9/2009 @ 6:09 pm

  43. It could just be that the Supreme Court is the only branch of the government that does not want to go into the automotive bussiness, JD.

    Comment by nk — 6/9/2009 @ 6:12 pm

  44. 2 – So much for Judge Napolitano of FOX, eh?

    Comment by panorama — 6/9/2009 @ 6:14 pm

RSS feed for comments on this post. TrackBack URI

Sorry, the comment form is closed at this time.


Powered by WordPress.