In a move that shocked me completely, Supreme Court Justice Ruth Bader Ginsburg has decided to delay a deal for Fiat to buy Chrysler. As I posted Sunday, I thought she would just affirm the ruling of the Second Circuit Court of Appeals and let the deal go forward. But she did not do that at all. Instead, Ginsburg said in an order Monday that the sale is "stayed pending further order." The action indicates that the delay may only be temporary.
A group of Indiana pension funds that bought $42 million worth of $6.9 billion in Chrysler's senior debt for 43 cents on the dollar tried to stop the Fiat-Chrysler deal. But when they bought that debt at a discount in July 2008, they must have known they were making a risky bet. Those pension funds tried to argue that the deal violated the constitution and the use of TARP money for Chrysler was not a use of funds that Congress had intended.
Those Indiana pension funds must be rejoicing now. They used this argument in the bankruptcy court and failed. They used it again in front of the Second Circuit Court of Appeals and lost -- although the Appeals court gave them until 4 pm today to convince Ginsburg to let the Supreme Court consider their arguments. And she has decided to think about this for a period of time.
If she waits until June 15th, Fiat has the right to withdraw. So the clock is ticking.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.