Court takes brake off Chrysler-Fiat deal
TEXT OF STORY
KAI RYSSDAL: Late this afternoon the Supreme Court changed gears on the Chrysler bankruptcy. After a 24-hour freeze the court ruled Chrysler’s sale to Fiat can, indeed, go through — that over the objections of some of Indiana’s public pension funds. The whole episode, though, led us to wonder whether it was ever possible for Chrysler creditors, like those funds, to hold out any hope for a better deal?
Marketplace’s Caitlan Carroll reports.
CAITLAN CARROLL: Indiana State Treasurer Richard Mourdock’s beef with the Chrysler bankruptcy is pretty simple:
RICHARD MOURDOCK: For 150 years of American law, being a secured creditor meant that, if there was a bankruptcy, you were first in line for proceeds. In this case, all of that has been overthrown.
And Fiat, which hasn’t invested a dime, will own 20 percent of Chrysler. Meanwhile, Indiana’s pensioners will be paid 29 cents on the dollar for their investments in the troubled car company. Mourdock and others have doubts that this is really the best deal possible.
JIM CASHMAN: I hate to say it, but I just don’t see Fiat as being able to offer anything that might be of value to Chrysler.
Jim Cashman, an auto industry expert at the University of Alabama, is a Fiat critic.
CASHMAN: Number one, it probably has the lowest-quality vehicles in Europe. Number two, it has no money.
Given time, Cashman believes other buyers would have emerged and made offers for Chrysler’s strongest brands, like Jeep.
David Skeel, a bankruptcy professor at the University of Pennsylvania, agrees.
DAVID SKEEL: Frequently in big bankruptcy cases there are three, four, five different reorganization plans before one finally gets confirmed.
But in this case, the only bidder was the U.S. government — and they back the Fiat merger.
Now that the Supreme Court has cleared the way, Chrysler hopes to complete its sale by the June 15th deadline.
Meanwhile, the car company continues to lose $100 million a day.
I’m Caitlan Carroll for Marketplace.
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