The sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA was temporarily blocked by a U.S. Supreme Court justice on Monday, with no indication how long the delay would last.
In a one-sentence order, Justice Ruth Bader Ginsburg said the bankruptcy judge's orders allowing the sale "are stayed pending further order" by her or by the Supreme Court.
It was unclear what the next step would be, but many experts interpreted the action as giving the top court more time to weigh its response to a request by three Indiana pension funds and others for a stay of the deal.
Ginsburg acted right before a 4 p.m. EDT deadline from a U.S. appeals court in New York. The end of the appeals court order would have allowed Chrysler to proceed with its Obama administration-backed sale to Fiat, a union-aligned trust and the U.S. and Canadian governments.
Both Chrysler and the Obama administration have said a long delay could kill the deal and end up with Chrysler's liquidation. Fiat can walk away from the deal if it does not close by June 15.
An administration official was among those who characterized Ginsburg's ruling as a move to give the court more time.
"We understand this to be an administrative extension designed to allow sufficient time for the court to make a determination on the merits of the request for a stay," the official said.
The Chrysler case could set a precedent for General Motors Corp, which is using a similar quick-sale strategy in its bankruptcy in New York.
Jerry Reisman, a lawyer in New York said, "Unless Chrysler is allowed to reorganize and sell its assets to Fiat, GM will certainly face the same type of opposition from objecting creditors which will doom GM's reorganization."
Chrysler had no immediate reaction to the high court delay. "Pending further information from the court, we have no comment at this time," a spokesman said.
The Indiana pension funds had asked the Supreme Court over the weekend to stop the sale of Chrysler so they could challenge the deal in an appeal to the nation's highest court.
Bankruptcy lawyers also said Ginsburg's order seemed to be designed to give the high court more time to decide whether to intervene in the dispute.
MAINTAINING THE STATUS QUO
Sheryl Toby, a bankruptcy attorney in Michigan, said, "I don't think this gives you an indication that they're ruling on the merits, but she (Ginsburg) is maintaining the status quo at least to determine whether to consider the appeal."
Steven Gross, co-head of the restructuring group at law firm Debevoise & Plimpton in New York, said, "If the court waits too long, Chrysler might not be around."
