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Supreme Court Halts Sale of Chrysler to Fiat

The U.S. Supreme Court has at least temporarily blocked the sale of Chrysler LLC's assets to a new Chrysler-Fiat partnership, according to an order released Monday.

The court ordered a halt to the sale pending further directions, without elaboration. Chrysler, Fiat and the U.S. government had been prepared to close the sale as soon as Monday if an appeal from the Indiana state pension fund had been rejected.

Justice Ruth Bader Ginsburg had been charged with deciding whether the court should hear the appeal.

The pension funds maintain that Chrysler should have sold itself off in pieces because that would have been better for secured lenders.

However, the U.S. Second Court of Appeals on Friday upheld U.S. Bankruptcy Judge Arthur Gonzalez's approval of the sale, leading the pension funds to appeal.

A hearing and consideration by the nation's highest court could result in a serious delay of the deal, which Fiat would like to close by June 15.

"There's only two times in my life when I have seen the Supreme Court act quickly," said Jennifer Shaw, a retired bankruptcy attorney who has closely followed the Chrysler case. One was the Bush v. Gore recount, she said, and the other was whether President Richard Nixon had to comply with U.S. District Judge John J. Sirica's order that Nixon turn over his tapes.

Early Sunday morning, lawyers for a group of citizens with product liability claims against Chrysler filed a brief with Ginsburg that supports the Indiana pensioners' case. Under terms of the sale, the new company, led by Fiat, would face no risk from product liability lawsuits filed against Chrysler related to vehicles produced or sold until the day the sale closes.

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