Legal News

Breaking: 2d Circuit OKs Chrysler Sale; Deal Stays on Hold

By Jennifer Forsyth

The AP and our brethren at Dow Jones Newswires are reporting that the 2nd Circuit has approved the sale of Chrysler sale to Fiat. Yet, the deal will remain on hold until 4 p.m. Monday for a possible appeal unless the Supreme Court announces before then that it won’t consider the case.

The ruling came after arguments Friday afternoon from attorneys representing Chrysler LLC, Fiat Group SpA and three secured debtholders, the latter of which argue that the deal approved by a bankruptcy judge unfairly favors the interests of the company’s unsecured stakeholders ahead of them. Included in this trio was an Indiana pension fund which argued that the sale to Fiat would unfairly wipe out all of Chrysler’s past liabilities, the AP reported.

But Chrysler lawyer Thomas Cullen said the deal was better for everyone, including all debtholders. “The objectors are going to be harmed by the remedy they seek,” Cullen told the court. “They are doing better than liquidation.”

Full post as published by Law Blog - WSJ.com on June 05, 2009 (boomark / email).