Chrysler is Dead. Long Live New Chrysler

Last Updated Jun 11, 2009 12:32 PM EDT

It looks like the Fiat takeover of Chrysler is finally a done deal, despite a group of Indiana-based pension funds seeking to stop it.

The U.S. Supreme Court on June 9 vacated a temporary stay that was granted on the pension funds' behalf the day before by Justice Ruth Bader Ginsburg. The Chrysler-Fiat decision was widely reported June 10.

"The temporary stay granted by Justice Ginsburg on June 8, 2009, is vacated," the court said. With that unmemorable sentence, Chrysler passes to its newest savior. Just over a decade has passed since Daimler took over Chrysler by forming DaimlerChrysler. It's also been about three decades since the U.S. government rescued Chrysler with loan guarantees the first time.

The DaimlerChrysler merger fell apart in 2007. Daimler and Chrysler never did achieve much in the way of saving money by sharing parts and development costs. Chrysler and Fiat insist they won't make the same mistake of sleeping single in a double bed.

The so-called New Chrysler has extensive plans for Chrysler to take advantage of Fiat's small-car expertise, and for Fiat to take advantage of Chrysler's U.S. distribution network.

The pension funds and others that objected to the Fiat takeover didn't stand much of a chance. The Obama Administration was determined the deal would go through, to get Chrysler out of bankruptcy as fast as possible.

The pension funds argued that the Chrysler's bankruptcy and its rescue by the U.S. Treasury broke the long-established rules for which creditors are first in line to get paid, when a company goes bankrupt. A dissident group of bondholders earlier made pretty much the same argument, with the same lack of success.

The Supreme Court's ruling also appears to clear to way for Chrysler to terminate close to 800 dealers, despite their equally long and seemingly reasonable list of objections about the unprecedented nature of Chrysler's bankruptcy and its distressed-merchandise sale to Fiat.

Now for the hard part: Chrysler and Fiat need to deliver.

Graphic illustration: BNET Autos
  • Jim Henry

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