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There’s been something of a roadblock with Chrysler LLC’s planned quick exit from bankruptcy after a US Supreme Court justice delayed the carmaker’s sale to a company run by Italy’s Fiat S.p.A.

Justice Ruth Bader Ginsburg, in a one-sentence statement, said the orders of the bankruptcy judge allowing the sale “are stayed pending further order of the undersigned or of the court.”

Reuters newsagency reports that Judge Ginsburg acted as an afternoon deadline from a US appeals court in New York was due to expire.

The appeals court order would have allowed Chrysler to proceed with its sale to Fiat, a UAW-aligned trust and the US and Canadian governments.

Reuters said it was not clear if Judge Ginsburg’s order was designed to give the high court more time to consider the dispute.

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Her order made no mention of when briefs in the appeal would have to be filed or whether the Supreme Court would hear the underlying legal challenge to the sale.

Indiana pension funds and consumer groups had asked the Supreme Court on Sunday to stop the sale while they challenged the deal.

President Obama’s administration, earlier yesterday, urged the Supreme Court to allow the sale, saying that blocking the deal would have “grave consequences.”

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Solicitor General Elena Kagan of the U.S Justice Department, the administration’s lawyer before the high court, said in a written argument that blocking the sale could force Chrysler’s liquidation.

Ms Kagan defended the use of the bailout funds and said granting a stay beyond June 15 would jeopardise the sale. Fiat can walk away from the deal if it does not close by that date.

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 she (Judge Ginsburg) is maintaining the status quo at least to determine whether to consider the appeal.”

The Chrysler case could set a precedent for General Motors, which is using a similar quick-sale strategy in its bankruptcy in New York.

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The Indiana pension funds argued that the sale of Chrysler unlawfully rewards unsecured creditors ahead of secured lenders and amounts to an illegal reorganisation plan.

They also claim that the US Treasury Department overstepped its legal authority by using bailout funds for Chrysler when Congress intended the money for banks.






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