Patterico's Pontifications

6/9/2009

Supreme Court Lifts Stay in Chrysler Sale

Filed under: Economics,Government,Obama — DRJ @ 6:13 pm



[Guest post by DRJ]

The Supreme Court denied the applications for a stay of the Chrysler sale. Lyle Denniston at Scotusblog links a copy of the Order here. The Order states that applicants failed to meet all 3 prongs of their burden:

1. Convincing 4 justices to agree to grant cert; and

2. Convincing 5 or more justices to agree the decision authorizing the sale was erroneous; and

3. Showing that irreparable harm will result from denial of the stay, although the Court also notes that a “stay is not a matter of right, even if irreparable injury might otherwise result.” Instead, it is a matter of judicial discretion.

The Order further states a denial of stay is not a decision on the merits.

There is no irreparable harm if money damages can make applicants whole and if there are funds available to pay them. However, the pension funds and other applicants claim that once the sale to Fiat goes through, there will be no remaining assets in Old Chrysler to satisfy their claims and the law protects the New Chrysler good faith purchasers from their claims. Thus, IMHO applicants need to show these are not good faith purchasers.

— DRJ

37 Responses to “Supreme Court Lifts Stay in Chrysler Sale”

  1. Welcome to the World of Crony Capitalism!
    What some people will do to keep fresh produce and flowers on the table (for others it was just a bazillion pairs of shoes).
    I guess the concept of “contract law” is now relegated to the dust-bin of history?

    AD - RtR/OS! (de37bf)

  2. The sooner they get this taken care of the sooner I can be rolling in my new cherry apple red Fiat is how I look at it. You just watch I’ll be the first on my block.

    happyfeet (2d133f)

  3. You’ll be the ONLY one on your block…

    Scott Jacobs (90ff96)

  4. They be eyeballin my Fiat. You’ll see.

    happyfeet (2d133f)

  5. It always amazes me how SCOTUS can grant stays and/or cert to prisoners of war, combatants, who have never touched foot on American soil, but look for any nook or cranny to avoid getting involved when capitalist/conservative rights are being trampled.

    Ed from SFV (a53c07)

  6. SCOTUS: Profiles In Courage, need not apply!

    AD - RtR/OS! (de37bf)

  7. Has anyone read Denniston’s commentary on the denial of stay? There appears to be a bit of smacking down for the administration:

    In what may have been an excess of exuberance, the White House issued a statement about the Chrysler deal Tuesday night. Attributed to an unnamed White House official, it included this assertion: “We are gratified that not a single court that reviewed this matter, including the U.S. Supreme Court, found any fault whatsoever with the handling of this matter by either Chrysler or the U.S. Government….” There are some problems with that, and they are not mere legal technicalities.

    Denniston then lays out a number of scenarios when the court might weigh in on “bailout” law. If I had to guess the mention of waiting until the crisis has passed might well be when we hear from the Court.

    Mary (1dc631)

  8. Cannot a claim be made against the federal government, since the federal government is not merely an arbiter here?

    Kevin Murphy (0b2493)

  9. Kevin Murphy,

    A situation like this would typically trigger thoughts of lender liability, but the government might well have governmental immunity from that type of claim.

    DRJ (180b67)

  10. This is disgusting.

    JD (a7fa4a)

  11. Sad. I want Obamanation to be tried in court.

    Meanwhile, there are whisperings that Fiat is paying off a favor to Don Corleone…Prez Obama.

    Fiat and the DOJ.

    Patricia (2183bb)

  12. “Cannot a claim be made against the federal government”

    The federal government is offering 29 cents on the dollar to Chrysler’s debt holders.

    Or they can take their chances trying to liquidate a company worth zero dollars to try to get more.

    poon (093c46)

  13. Poon just proved its unadulterated abject idiocy with that comment. Kudos. If you were trying to prove yourself to be the largest sh*tforbrains around, you succeeded.

    JD (a7fa4a)

  14. Poon just proved its unadulterated abject idiocy once again with that comment.

    Fixed that for ya, JD.

    Paul (creator of "Staunch Brayer") (290fb9)

  15. You guys really are all done, aintcha?

    No arguments left, just mindless profanity.

    poon (093c46)

  16. poon, here’s the problem: Chrysler makes crappy cars and they don’t deserve to continue operating. The assets should be sold off, the profits from the sale should be used to pay back creditors, and this whole mess should be put to rest.

    I don’t want my tax dollars being used to prop up a company that’s a proven loser. Neither should you.

    h2u (147639)

  17. 16

    I don’t want my tax dollars being used to prop up a company that’s a proven loser. Neither should you.

    Neither do I, but arguing this is unfair to the debtholders when they are likely getting more than they would in liquidation is a bit of a stretch.

    James B. Shearer (0b3fce)

  18. h2u,

    What “profit”?

    I was under the impression that Fiat is paying zero dollars for their chunk of debt free nuChrysler.

    poon (093c46)

  19. James – Explain to us why unsecured creditors are being compensated at a rate higher than secured creditors. We already know poon cannot do that, but maybe you can. It will be interesting to hear how that happens in your world, since it rarely if ever happens in bakruptcy court.

    JD (a7fa4a)

  20. Neither do I, but arguing this is unfair to the debtholders when they are likely getting more than they would in liquidation is a bit of a stretch.

    James, I don’t think it’s that much of a stretch. I’d much rather see who is interest in purchasing the assets rather than this situation:

    Fiat, which would manage the new Chrysler, is not putting up cash but will be providing technology for small, fuel-efficient vehicles, an area in which Chrysler has lagged its competitors.

    Source: Washington Post

    I was under the impression that Fiat is paying zero dollars for their chunk of debt free nuChrysler.

    poon, your impression is correct, but that’s only because of the government inserting themselves into the bankruptcy proceedings. In a much more sane world we’d see Chrysler dismantled and liquidated as opposed to being absorbed by Fiat.

    And, in case you need reminding, Fiat’s best known for the popular acronym describing their reliability: Fix It Again, Tony. If there’s anybody who is sure to continue making a laughingstock out of the Chrysler brands it’s them.

    h2u (147639)

  21. 20

    James, I don’t think it’s that much of a stretch. I’d much rather see who is interest in purchasing the assets rather than this situation

    Chrysler is getting $2 billion for its assets such as they are. No one was lining up to offer more.

    James B. Shearer (0b3fce)

  22. More to the point, we should tell all those losers and communities who rely on Chrysler (not to mention the suppliers and sub-contractors) that they should be glad their communities and jobs were sacrificed so conservatives could feel better about mindless rules being followed.

    (I suppose one would be out of line to point out, rules ain’t so popular here when they refer to criminal defendant rights or the right not to be tortured or to properly engage in warrantless searches….in those case, rules/laws need to be broken for the greater good of waterboarding)

    More to the point, my stupid state treasurer led this fight over six million dollars out of 6.9 billion. In doing so he argued Chrysler should be destroyed and take Kokomo, Indiana and other towns with it. Six million dollars versus the thousands of jobs ACTUAL Hoosiers have.

    Way to go, Rich, placing your fiduciary duty to a pension fund above your fiduciary duty to the State of Indiana.

    Ah, union busting never smelled so sweet as when right wingers can wrap themselves in terms most of them barely understand: UCC section 9, the Bankruptcy code, and “secured creditors.” Well, boys, gear up, there’s still a chance to smash that dastardly union when GM’s bankruptcy plan gets challenged.

    Real people sacrificed for paper money and false principles…ladies and gents, the modern GOP

    timb (8f04c0)

  23. And JD makes a very good point…

    The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.

    Fiat SpA “eventually” will own 35%, and the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.

    Source: Wall Street Journal

    Why does the UAW deserve 55% of the company?

    h2u (147639)

  24. Chrysler is getting $2 billion for its assets such as they are. No one was lining up to offer more.

    James, but that’s my point. Those assets were never really put on the market. How could anyone really put an offer on the table with the gov’t breathing down their neck?

    And the fact that the UAW is getting such a huge chunk of the company just reiterates the point. The government is pressuring the bankruptcy court to save union jobs instead of saving our tax dollars. That’s pretty darn pathetic.

    h2u (147639)

  25. h2u,

    When you figure in the government’s cost of unemployment compensation for all the laid off workers, covering underfunded pensions, extending COBRA coverage, etc. if Chrysler was liquidated, I don’t think this gamble with the taxpayer’s money is unreasonable.

    Risky, yes. Unreasonable, no.

    poon (093c46)

  26. More to the point, my stupid state treasurer led this fight over six million dollars out of 6.9 billion.

    …six million dollars that, as I recall, was invested by a police pension fund. So it’s okay to punish the police financially but now the employees of a failed company? Who are you to make that call, timb?

    Jobs end. Companies fail. The government should not be in the business of picking winners and losers. It’s pretty clear that they are playing favorites, don’t you think?

    h2u (147639)

  27. When you figure in the government’s cost of unemployment compensation for all the laid off workers, covering underfunded pensions, extending COBRA coverage, etc. if Chrysler was liquidated, I don’t think this gamble with the taxpayer’s money is unreasonable.

    poon, correct me if I’m wrong, but aren’t we covering that cost anyway with the gov’t funds — taxpayer dollars — that are being used to bail out Chrysler? Instead of paying out the unemployment compensation and being done with it, now we — again, the taxpayers — are part owners of this horrid auto company.

    A horrid auto company that’s now competing with Ford, who took no bailout money and who has to employ United Auto Workers to build their cars despite the UAW owning 55% of Chrysler. Shenanigans I tell ya. Shenanigans.

    h2u (147639)

  28. 19

    19.James – Explain to us why unsecured creditors are being compensated at a rate higher than secured creditors. We already know poon cannot do that, but maybe you can. It will be interesting to hear how that happens in your world, since it rarely if ever happens in bakruptcy court.

    I believe only some unsecured creditors are getting more, others are getting nothing. As for why, it is because the government is giving them a gift, without government support they would likely get nothing.

    James B. Shearer (0b3fce)

  29. 25

    Risky, yes. Unreasonable, no

    It is unreasonable in that it gave the unions more generous terms than it had to. However this generosity is at the expense of the taxpayer not the secured creditors.

    James B. Shearer (0b3fce)

  30. However this generosity is at the expense of the taxpayer not the secured creditors.

    Pure speculation, James. It was at the expense of both — it’s only that we can absolutely certain of the taxpayer expense.

    h2u (147639)

  31. Heh- Fiat law.

    BR (ba8960)

  32. 30

    Pure speculation, James. It was at the expense of both …

    Why do you believe Chrysler’s assets were worth more than $2 billion?

    James B. Shearer (0b3fce)

  33. The Jeep brand is easily worth billions by itself, if there were an unencumbered market.

    Ed from SFV (a53c07)

  34. This is pure unadulterated Obama-love here. Good Allah. James, you admit that some unsecured creditors are getting more than they deserve. Good on ya’ for at least admitting that. Do you not understand how fundamentally wrong that is?

    JD (f9b882)

  35. h2u – So long as Teh One is doing it, it is alright.

    JD (f9b882)

  36. 34

    … Do you not understand how fundamentally wrong that is?

    I don’t see how it is any worse than all the other undeserved benefits the government hands out.

    James B. Shearer (4526ac)

  37. The good and bad of Government Motors….
    The Corvette Team took another class win at LeMans today.
    It could very well be the last time they ever compete at LeMans.

    AD - RtR/OS! (914de9)


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