Just when Chrysler was on its way into the loving arms of Italian automaker, Fiat, a funny thing happened in the Bankruptcy Court’s handling of the bullet train, breathtakingly fast bankruptcy that we had been promised. US Supreme Court Justice Ruth Bader Ginsberg, in her role as 21st century circuit-rider, issued a stay, all on her very own, that brought it all to a crashing halt. Perhaps for a few days anyway.
Justice Ginsberg’s Order, issued minutes before a 4pm deadline, is breathtaking in its simplicity:
“ORDER
UPON CONSIDERATION of the application of counsel for the
applicants, and the responses filed thereto,
IT IS ORDERED that the orders of the Bankruptcy Court for the
Southern District of New York, case No. 09-50002, dated May 31 and June 1, 2009, are stayed pending further order of the undersigned or of the Court.”
Yes, one single Justice of the highest court in America has that kind of power.
We are immediately told not to read anything into that brief Order – so we won’t – but behind the few words Justice Ginsberg used is a tension that has been growing through the course of this recession since the end of 2007. Many interests are vying for dominance in the wreckage of Chrysler and what comes next: from workers and their pension and healthcare plans, to unpaid suppliers, to secured and unsecured creditors from the world of huge financial institutions, down to smaller companies who did business with the automaker, some for many years.
As one or more US Supreme Court Justices now ponder the fate of Chrysler’s shotgun marriage to Fiat, the Deal to purchase Chrysler allows Fiat to back out if the Deal does not close by next Monday – well, some of Chrysler that will be allowed to survive and dressed up in its wedding day finest. Fiat now says that they will hang on and wait for their betrothed and for getting all those dealerships and that big distribution network in order to get back into the game in North America after many decades and so much bad, 70’s era publicity for cars that broke early and often.
It was a horrendously busy weekend for lawyers in the Chrysler Bankruptcy case and Supreme Court staff. Mountains of paper were filed, challenging and upholding the sale, depending on which side you were on. Electronic filings of some of these papers were made just before midnight Saturday night while you and your friends perhaps were out enjoying another glass of Chablis, lingering over a late dinner. Papers continued to be filed at the Supreme Court all weekend, right up until 10am Monday morning, with aides, clerks and others who assist the Justices, all scrambling throughout the weekend to read, organize, prepare summaries and Bench Briefs to help the Justices focus on what it was all about. At some point over last weekend, Justice Ginsberg studied enough of the papers to form her preliminary conclusions leading to the brief Order quoted earlier.
The matter was coming up on the Rocket Docket from the New York-based Bankruptcy Court and above them, the Second Circuit Federal Court of Appeal, which had not yet issued a formal opinion explaining why they were about to approve the sale to Fiat – a bell which would be hard, if not impossible to ‘un-ring,’ as lawyers are fond of saying. Lawyers challenging the sale to Fiat used the Emergency Application route, applying directly to the assigned Circuit Justice, the individual US Supreme Court Justice who is assigned jurisdiction for these lightning-fast legal matters, theoretically on duty, 24-7, to hear temporary matters of an emergency nature from the geographic federal Circuit in which New York is located. The nine Justices, when each is acting as Circuit Justice, each have separate jurisdiction slicing up all territory of the Federal Court Circuits so that there is one Justice who is theoretically always on duty for these sorts of things.
The Media often carries news of a US Supreme Court Justice acting in this Circuit Justice capacity to stay imposition of a death penalty sentence at the very last minute – not unlike the way it is portrayed in the movies or television.
Chrysler’s sale to Fiat, it is allowed to go through without full consideration by the US Supreme Court, something that would take a long time to accomplish, will have huge ramifications for the long line of creditors waiting for their day in Court during the Chrysler Bankruptcy. Some analysts question whether proceedings like these are just going too fast, and in their blinding speed favoring the larger, well-moneyed financial institution creditors over workers, retirees and their pensions and health care plans, and others with claims to a slice of Chrysler’s Debtor Estate in Bankruptcy.
Papers filed in last weekend’s blizzard of legal filings to the High Court suggest that Chrysler is losing $100 million per day of delay, pending the sale. Stakes on all sides and the extreme tension, pitting so many interests against one another, embodied in this standoff are high and growing higher daily. Stay tuned; this may be a warm-up and even of precedential value for when GM’s Bankruptcy progresses a bit further.