Supreme Court Pulls Old Negotiating Tricks on Fiat

WASHINGTON - The Supreme Court delayed the sale of most of Chrysler's assets to Fiat by telling the carmaker, "Wait a minute. I have to go in the back and talk to my boss," an old negotiating ploy that heretofore has not been used on the sale of a whole car company.

Fiat responded by walking around the parking lot with its friend, saying, "If the Supreme Court doesn't meet my price, I'm getting out of here. I'm doing THEM the favor, not the other way around."

The proposed solvent/insolvent hybrid

Justice Ruth Bader Ginsburg, who handles emergency matters arising from the United States Court of Appeals for the Second Circuit, refused to tell Fiat the invoice price of Chrysler, only the sticker price. Fiat responded by waving a copy of Consumer Reports in her face.

Observers say that the Supreme Court might tell Fiat that it can buy Chrysler for "only $349 a month," without saying that at rate it will take 18,000 years to pay off. Or the Court might take Fiat aside and say, "Don't tell my boss I said this, but I'm going to give you a special rate" that isn't special at all.

If Fiat walks away from the deal, it will mean near certain liquidation for Chrysler. However, it will mean nothing for the Supreme Court, which, in its new role as auto dealer, has many other companies on its lot to sell. In fact, some say it's just dicking around with Chrysler as preparation for really screwing over GM.

Chrysler and GM said they hoped the Supreme Court would come out of the back office soon so negotiations could resume. Lawyers for both said that speed was of the essence if the companies are to survive, even though everybody knows they probably won't.

Comments

[Mike Cohen]

Maybe every member of congress should be required to buy a new American car immediately

[John Marshall - Huffpost Blogger]

Well, apparently the whole thing is moot. According to the New York Times, the U.S. Supreme Court has just declined to hear a challenge to the Chrysler bankruptcy settlement, clearing the way for the sale of Chrysler's key assets to Fiat.

As a comedian and Emmy-nominated writer who focuses on "cute analogy" I would like to thank all of you for participating in today's economic symposium.

[We-Are-The-Ones]

It was funny anyway. ;-)

[ejhickey]

The quality of Fiat was rated last by a recent JD Power survey in the UK. Chrysler was one notch ahead of Fiat. This does not look good.

[LeonBNJ]

What the bondholders want it got their usual rights to get paid first over almost all secure creditors and especially pension benefits. If they were getting a greater piece of the company, and less was given to the UAW Pension Trusts, the wouldn't be pushing this appeal. Problem is that the Government - both Democrats, including Pres. Obama and a number of Republicans fear that any cuts in the pensionires benefits, especially as to medical benefits, would get them voted out of office in the next election. There are a lot more union and working class workers who vote than individual bondholders so the politicans push the law around for political reasons, one reason why we have bankruptcy law in the hands of judges. Indeed a decision in favor of the bondholders (as well as those with product libability lawsuit and 'lemon law' claims) could be as noted, as infimous as the decisions of the Court against FDR's 'New Deal' and NRA Recovery programs.

[pup sydney]

I really like to Try an alpha Romeo.
They are built for handling so well at high speed and they have had a design that the germans could only dream of until recently. I like Alpha and Fiat :give them a chance. We gave the US car markers a chance for so long to screw us out of money!

[elders]

This is a funny but very inaccurate allegory.

1) The petitions are for a variety of reasons in my understanding. Such as a disconnect between liability from old Chrysler to Chrysler Group.

2) The new structure usurps the legal tradition of debt structures. Many of the debt holders would be shortchanged.

3) The company is already bankrupt. It is already "out of business".

4) This has major implications for the future. Saying "killing the rule of law" doesn't threaten the US...who do you sound like?

” ‘We would never walk away,’ Marchionne said in response to a question about whether Fiat would pull out of the deal if it isn’t completed by the June 15 deadline. ‘Never.’ Rather, Marchionne said that ‘We should just be patient and let the system work.’ ”

http://www.scotusblog.com/wp/foes-of-chrysler-deal-in-new-plea/

"The case of In re Chrysler LLC, Debtor has the potential to produce the most significant Supreme Court ruling on the government’s power to deal with economic crisis since the Court struck down major parts of President Franklin Roosevelt’s New Deal, in Schechter Poultry Corp. v. U.S. in 1935 and U.S. v. Butler in 1936. But the Supreme Court will not actually rule on any of the basic legal challenges unless it first puts the Chrysler sale on hold, and then agrees to hear and decide the case itself...."

http://www.scotusblog.com/wp/key-points-of-chrysler-challenge/

[tfred]

Yeah, but there are different types of bankruptcy. Chrysler is being sold as a "whole" unit. If Fiat doesn't buy the entire company (keeping Chrysler producing as a single car manufacturer, (And Fiat can walk away frrom the deal on June 15, at which point the whole sale would have to be renegotiated) and if Fiat doesn't want to purchase the entire company, then it will be broken up and sold piecemeal, never to be a car manufacturer again. This type will benefit the few (unions etc.) but will guarantee that Chrysler will join the ranks of Packard, Studebaker, Hudson and Nash. Just a pleasant memory.

[paixa3]

Actually your country has turned into such an embarassing disaster that I expect this deal will be screwed up until the company literally disappears.

[billhodges]

A fantasy in it's truest form. Now the truth be known that if the court takes this case, and they should, it will be on the constitutional merits and those alone. You can not just change the rules to make things go your way as Obama has done.

You should pray, if you do, that the court turns this around and lets the government know it has serious boundries and they need to honor them. Nothing less than the success of our country lies at risk if we continue killing the rule of law.

[John Marshall - Huffpost Blogger]

The success of our country was put at risk long before Obama took office. If he's doing something unconstitutional in response to a financial crisis, the court will let him know, as it did for FDR and Truman. He's certainly not hiding anything. Where was the concern for the rule of law when Bush was mounting an invasion based on evidence that didn't exist? As for boundaries, it's clear that the boundaries between business and government have been blurred for decades. That's one of the things that got us into this mess. Does Chrysler deserve to be saved? I don't know, but if the Supreme Court disallows the sale, Chrysler will definitely go out of business. Past bad business practices, not the killing of the rule of law, is what threatens the success of the U.S.

[ejhickey]

We did not vote for Obama just get Bush II. The President is a lawyer should have known that there were serious legal problems in handling the Chrysler Bankruptcy in this manner. In any case Fiat is not walking away from the deal . The head of Fiat issued a statement to that effect 5 minutes after Justice Ginsburg issued her temporary stay. Why would Fiat walk away - they are getting a stake in Chrysler for zero dollars. The Supreme Court should take some time a decide whether it was legal and constitutional to compromise the rights of secured creditors in favor of unsecured creditors..