WASHINGTON — The U.S. Supreme Court in a surprise move ordered a temporary delay Monday in the bankruptcy sale of Chrysler to Italian automaker Fiat, saying it needed more time to decide on complaints that the government-engineered deal was unfair to some bondholders.
The one-line order from Justice Ruth Bader Ginsburg raised the possibility that the court could halt the sale and force the Chrysler deal to be renegotiated. Such a move could also complicate the much larger General Motors bankruptcy.
The justices are considering an emergency request from three Indiana pension funds that said they were being shortchanged by the bankruptcy plan.
The funds argued that the deal, brokered by the Obama administration in April and put on a fast track through Bankruptcy Court, wrongly favors Chrysler's employees and union workers over secured creditors and that the government wrongly gave the automaker taxpayer money from a fund earmarked for financial institutions.
The case has become a rallying cry for conservatives who accuse the Obama administration of heavy-handed intervention in private industry.
Until Monday afternoon, the Supreme Court had been expected to turn away the last-minute challenge. Last week, a bankruptcy judge upheld the plan, and the U.S. Court of Appeals in New York did the same Friday, but kept it on hold until 4 p.m. Eastern time Monday to allow for an appeal to the Supreme Court.
The court extended that temporary hold but could decide as early as today whether to issue an emergency stay while the bondholders appeal -- or even decide their appeals.
Fiat has set June 15 as the deadline for completing the deal, though it appeared to soften its stance Monday.
Lawyers for the Obama administration warned the court Monday against standing in the way. They said Chrysler was losing $100 million a day. Without a deal with Fiat, the nation's No. 3 automaker will face liquidation and a loss of 38,000 jobs and 3,000 dealerships, the government's lawyers said. The numbers were somewhat overstated as Chrysler is proceeding with plans to terminate agreements today with 789 dealers as part of its restructuring.
Just after 4 p.m., Ginsburg, who handles emergency appeals from New York, sent out the brief order that kept the deal on hold. She did not say when the court would act.
