The region's largest manufacturing employer failed to emerge from bankruptcy Monday after the U.S. Supreme Court delayed a plan to sell Chrysler LLC to a group led by Italian automaker Fiat SpA.
The top court's decision to probe deeper into whether the sale is constitutional - an argument raised by three Indiana pension funds and other creditors - was announced just before 4 p.m., when a lower-court ruling also delaying the sale was slated to expire.
Earlier in the day, U.S. Solicitor General Elena Kagan had filed a brief with the court on behalf of the government, urging the justices to reject any delay, saying that blocking the deal would have "grave consequences."
However, moments after the Supreme Court delayed the sale, Fiat Chief Executive Officer Sergio Marchionne said in a telephone interview that the company will "never" walk away from the deal. The company had set a June 15 deadline for completion.
Chrysler had no immediate reaction.
"Pending further information from the court, we have no comment at this time," a spokesman said.
Justice Ruth Bader Ginsburg, in a one-sentence order, said the earlier decisions of the bankruptcy judge allowing the sale of Chrysler "are stayed pending further order of the undersigned or of the court."
There was no indication how long the stay order might remain in effect.
The order further delays Chrysler's planned emergence from bankruptcy as a smaller, leaner company with a new Italian style, a new name, and a commitment to continue manufacturing its vehicles in Toledo.
The once privately held automaker, recipient of billions in federal loans in the last six months, had planned to emerge from bankruptcy under the name Chrysler Group LLC.
But three Indiana pension funds have been trying unsuccessfully for weeks to force the liquidation of assets such as the venerable Jeep brand and Chrysler's three Toledo-area factories in order to repay $6.9 billion in secured debt.
Sheryl Toby, a bankruptcy attorney in Michigan, said, "I don't think this gives you an indication that they're ruling on the merits, but [Justice Ginsburg] is maintaining the status quo at least to determine whether to consider the appeal."
Chrysler maintained that selling the bulk of its assets to Fiat was the only way to prevent liquidation.
In exchange for a stake in Chrysler, Fiat would share its technology to create smaller, more fuel-efficient vehicles. In court filings, the two automakers set a June 15 deadline to complete the deal.
Leading up to Chrysler's April 30 Chapter 11 filing, the automaker struck a deal to give the majority of secured lenders $2 billion in cash, or 29 cents on the dollar, to erase $6.9 billion in debt.
But some debt holders balked and the automaker had to file for bankruptcy protection.
The Indiana funds, which own $42.5 million of Chrysler's debt, aggressively objected to the sale, arguing that it did not provide a big enough return for secured debt holders, while paying off unsecured stakeholders such as union retirees. However, a large majority of secured debt holders approved the deal.
Rep. Gary Peters, a Democrat from Bloomfield Township, Michigan, said in a statement yesterday that the state of Indiana was risking losses of more than $20 million in taxes and some 4,000 jobs should Chrysler be forced to liquidate.
"Other stakeholders, in-
cluding other secured lenders and Chrysler's auto workers, accepted shared sacrifice because they recognized their interest was better served keeping Chrysler alive rather than forcing liquidation," Mr. Peters said. "Why the officials who decided to take their objections all the way to the Supreme Court can't recognize this is beyond me."
The delay throws into question a planned June 29 return to work for several thousand laid-off auto workers at the Toledo Jeep Assembly Complex, Chrysler's Toledo Machining Plant in Perrysburg Township, and parts suppliers across the region.
More than 2,000 workers at the Toledo Jeep Assembly complex have been laid off since their employer went into bankruptcy.
Also laid off are about 1,100 workers at the Toledo Machining Plant, as well as thousands of others at area automotive suppliers.
"Unbelievable," Dan Henneman, Jeep Unit Chairman for UAW Local 12, said upon hearing of Justice Ginsburg's order. "I don't think Fiat's going to walk away from the deal just because of that, but you never know."
Mr. Henneman, who represents about 2,000 employees at the Toledo Jeep Assembly Complex, said he and other UAW leaders are undergoing a week of training this week in Fiat's "World Class" manufacturing process and principles in anticipation of going back to work at the end of the month.
The concepts that are being discussed by Fiat are ones that Jeep workers have been promoting for years, he added.
"For our plant and our work force, the possibilities are endless of what we could build here," Mr. Henneman said.
"We've worked our butt off for years and years to get our plant to where it is," the UAW unit chairman said. "We've got the most efficient, most flexible facilities in the company with the best work force. We're just looking for an opportunity to show the world what we're capable of."
Workers greeted the latest delay with scorn and anger.
"This is another example of what got this country in this mess in the first place," said Toledoan Charles Vega, who works at Chrysler's stamping plant in Warren, Mich. "It's because of the narrow-minded view of 'What's in it for me?' that dominates American business. I think this is just another example of Wall Street coming off the wall. This could bring down Chrysler and [General Motors Corp.] too."
Before yesterday's delay, remnants of the old Chrysler company - 789 dealers, three assembly plants, and several stamping and engine plants - were to be left as scraps for remaining creditors to fight over.
The jettisoned dealers, including five in northwest Ohio, still will lose their Chrysler, Dodge, and Jeep franchises today and will no longer be able to sell new vehicles of those brands or provide warranty work. However, they still will be able to service the vehicles they sold and sell used Chrysler, Dodge, and Jeep-brand vehicles.
Dealers had voiced concern as the bankruptcy continued because the lack of production is starting to affect their ability to get vehicles to sell.
Last week, Chrysler officials reported that the firm had an 86-day supply across all of its vehicles, but fewer hot-selling vehicles such as the Toledo-made Jeep Wrangler.
"We need to get this done," said Denny Amrhein, owner of Grogan's Towne Chrysler-Dodge in North Toledo, and Charlie's Dodge in Maumee. "Everybody's running out of cars, running out of money. This puts a hold on everybody."
In late April, after several months of trying to avoid it, Chrysler sought Chapter 11 bankruptcy protection under what appeared to be the protective custody of the Obama Administration as a way to facilitate the automaker's alliance with Fiat.
Under Chrysler's proposed new ownership structure, a UAW retiree health-care trust will receive a 55 percent stake in the new company, Fiat will get a 20 percent stake that can increase to 35 percent, and 10 percent would be owned by the U.S. and Canadian governments.
Staff writer JC Reindl contributed to this report, which also includes information from The Blade's news services.
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