Fiat: the agreement with Chrysler suspended by the Supreme Court
At 4 New York, about ten at night in Rome, the U.S. Supreme Court ruled the suspension of the agreement between Fiat and Chrysler. The Judge Ruth Bader Ginsburg agreed with pronunciamento unexpected and unusual, to take more time to analyze a complex case. The only problem is that in this case, as in that of General Motors, what is lacking most is their time. Chrysler lost 100 million dollars a day and is likely to be abandoned to his fate from Fiat if the agreement will be finally approved by June 15 next year. Beyond this date, the Lingotto has the contractual right to turn the heel and to frustrate the American car: a hypothesis almost obvious since there are no alternative offers to Turin.
In particular, a heterogeneous group of bondholders (some pension funds in Indiana, the groups defending the rights of consumers and the widow of a former Chrysler employee) have requested the cancellation of the sale of Chrysler to Fiat in order to achieve greater power warranty on its investment in Chrysler. The three pension funds in Indiana, representing teachers and policemen, have a debt to be 42.5 million dollars on Chrysler debt, bonds from the total 6.9 billion dollars. In return for these 6.9 billion dollars the new arrangements for the transfer of ownership of the Chrysler Group include the allocation pro rata to the bondholders secured “by 2 billion dollars by the government and 800 million dollars in settlement. To bondholders have been offered 29 cents for every dollar while the pension funds in particular have paid 43 cents U.S. dollars on their titles. The potential losses for these words are relevant bondholder in the rate on investment made, but negligible in comparison to the debt of Chrysler and also government investment group: only Washington (including the Canadian example has lent money to the group) has provided funding for it over 10 billion dollars in favor of the American home.
The pact signed by the move to Fiat is not liked by now to all creditors that Friday night had resorted to the Supreme Court following the rejection of the Court of Appeal to their previous requests.
Yesterday, however, surprised the Supreme Court has granted a little ‘more time, to give bondholders more room for the argument of their positions. Excessive extension of the terms, which will serve the court order to better analyze the terms of the issue and to agreement on the sale of Chrysler could lead to bankruptcy and put at risk over 50 thousand jobs.
For the Lingotto no court would be the second in a few days after the preference from Berlin to Magna-Opel Sberbank on the case. The intervention of Fiat was also advocated by the Chrysler and its workers: a bankrupt at this point would play much more than a few tens of millions and, especially, might create an awkward precedent for the management of another great progress in bankruptcy, that of General Motors. DONOTCHANGE
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