For update about Chrysler and the Indiana secured creditors request for a stay of the Chrysler Fiat sale, read The BLT, The Blog of LegalTimes. Also ScotusBlog updates on Chrysler bankruptcy stay.
Indiana secured bondholders are requesting the US Supreme Court to issue a stay to delay the sale of Chrysler to Fiat. As of 1:00 AM, Monday, June 08, 2009, New York time, there is no word from the Supreme Court or any of the parties about the status of the stay request. [Monday afternoon, Justice Ginsburg issued a stay for a full court review.]
The press has made the stay an all or nothing issue. Either the court can grant the stay to the bondholders or it can deny the stay and the secured creditors lose and the government wins.
There is another possibility besides letting the deal close as is or delaying the close of and allowing the bondholders to get more than 29 cents on the dollar.
The bondholders need to show irreparable harm to get the deal delayed, but when money is involved there rarely is irreparable harm if there is somebody to sue for money damages later.
Justice Ginsburg, or the whole Supreme Court, can find that there is not irreparable harm, deny the stay and allow the Fiat deal to close as is. Simultaneously, the Supreme Court can say with the denial that the bondholders have the right to sue the US Government and the UAW for the loss of value due to not following bankruptcy priority. The Supreme Court would have to find some way to limit the lawsuit as much as possible to the peculiar situation, such as when the government ends up with a controlling interest in the post bankrupt company.
It would be a win-win for all parties. The deal closes. Fiat gets Chrysler. The government and the UAW get what they want and the secured bondholders get their day in court to prove they are entitled to more money. If the secured bondholders win, the payout would come from the funds for US lawsuits and not from Chrysler or Fiat.
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