Texas Trial Law Advocate : Texas Business Litigation Lawyer & Attorney : Craig Cherry : Haley & Olson Law Firm : TX Personal Injury, Product Liability

Today, Justice Ruth Bader Ginsberg temporarily delayed the sale of Chrysler's assets to Fiat after two groups petitioned the high court for review of orders approving the sale by the bankruptcy judge and the Second Circuit Court of Appeals.  The Court's order does not state how long the delay will last.  Chrysler has claimed its deal with Fiat is a critical part of its plan to emerge from Chapter 11 bankruptcy protection and that if a sale to Fiat does not close by June 15, Fiat has the option of pulling out of the agreement, leaving Chrysler with no other choice but to liquidate.

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On Saturday, the U.S. Supreme Court was asked to block the sale of Chrysler assets to Italian automaker, Fiat, by two groups.  One group, consisting of Indiana state pension and construction funds argues that the terms of the sale favor unsecured creditors at the expense of secured stockholders and that the use of TARP funds to finance the bankruptcy is unconstitutional. 

The second group protesting the sale is a group of individuals that claim the terms of the sale would limit their ability to recover in product liability actions filed against Chrysler.  Last Monday, in a ruling that outraged many consumer rights advocates, the bankruptcy judge overseeing the Chrysler bankruptcy ruled that Fiat could not be held liable for product defects in Chrysler vehicles.

Justice Ginsberg has the authority to isse or reject a stay herself or refer the application to the full U.S. Supreme Court.

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On Friday, the U.S. Court of Appeals for the Second Circuit approved the sale of most of the assets of Chrysler to Italian automaker Fiat.  However, the court of appeals said the deal could not be completed until June 8 or until the U.S. Supreme Court decides not to hear the case.  The deal is primarily opposed by a group of Indiana pension funds that acquired $42.5 million in secured Chrysler debt last year.  The pension funds argue the deal is unfairly biased towards secured creditors.

In addition to approving the sale of Chrysler's assets, the bankruptcy judge overseeing the Chrysler bankruptcy also ruled that Fiat will not be responsble for any future product liability claims filed by the owners of current Chrysler vehicles.  It is believed General Motors will likewise seek the same relief in its bankruptcy proceeding regarding future product liability claims involving vehicles it manufactures before coming out of bankruptcy. 

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