Court clears roadblock

A bankruptcy judge on Tuesday approved Chrysler’s plan to terminate 789 of its dealer franchises, and the Supreme Court cleared the way for the automaker’s partnership with Italy’s Fiat, rejecting a plea by a trio of Indiana pension plans and others to block the sale.

Betty Jo Rosen

Betty Jo Rosen

NEW YORK — A bankruptcy judge on Tuesday approved Chrysler’s plan to terminate 789 of its dealer franchises, and the Supreme Court cleared the way for the automaker’s partnership with Italy’s Fiat, rejecting a plea by a trio of Indiana pension plans and others to block the sale.

U.S. Judge Arthur Gonzalez’s order says the franchises, which represent about 25 per cent of the company’s dealer base, can no longer act as authorized Chrysler, Dodge and Jeep dealers, effective immediately. A written ruling explaining the decision was expected to be filed later.

The sale of Chrysler’s assets to Fiat Group SpA had been expected to close more than a week ago, but Supreme Court Justice Ruth Bader Ginsburg’s Monday decision to delay the sale while studying an appeal by three Indiana pension and construction funds threatened to derail Chrysler’s restructuring plans.

In a brief filed with the Supreme Court Tuesday afternoon, Chrysler and Fiat warned that the deal will terminate if it does not close by June 15. While a new agreement could be negotiated, there’s no guarantee that one will be reached or that Chrysler will be able to be jump-start its operations after the deadline, they said.

Late Tuesday, the Supreme Court cleared the way for Chrysler’s sale to Fiat, turning down a last-ditch bid by opponents. The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.

“The applicants have not carried that burden,” the court said.