Broadcast Nets Panic over Second-Guessing of Obama Administration's Chrysler/Fiat Deal
If you stand in the way of President Barack Obama's agenda, beware because there may be a litany of consequences that could result from your act - regardless if the obstacle is legitimate or not.
On June 8, Supreme Court Justice Ruth Bader Ginsburg issued a stay to review an appeal by a trio of Indiana pension and construction funds that own a part of Chrysler's secured debt. They claimed the administration's handling of the deal that would have sold Chrysler's assets to Italian automaker Fiat (BIT:F) arbitrarily threw 150 years of bankruptcy law out without process of law.
The Supreme Court later vacated her order, which cleared the way for the deal. But during the 24 hours in between, there was a sense of panic coming from the broadcast networks, fearing the worst.
Immediately following Ginsburg's order to put a temporary hold on the deal, ABC's "World News" host Charles Gibson asked ABC's legal correspondent Jan Crawford Greenburg on the June 8 broadcast if this ruling put the entire deal in jeopardy.
"That's right and that would devastate the deal," Greenburg said. "Obviously, an appeal if the court got involved and it took up this whole case, it would take a long time, much longer than next Monday, as Chris pointed out, when this deal has to go through or Fiat can walk away."
On the June 8 "CBS Evening News," correspondent Anthony Mason warned Chrysler could be headed toward liquidation if immediate action weren't taken to satisfy the will of the Obama administration.
"Because the this deal is not closed by June 15, which is only a week from today - Fiat does have the right to back out," Mason warned after being asked by "Evening News" anchor Katie Couric if the clock was ticking on the deal. "And Chrysler maintains that if it loses Fiat then the only alternative for the company would be liquidation."
CNBC's Phil LeBeau also warned Ginsburg's decision could result in Fiat walking away on the June 9 "NBC Nightly News."
"It's unclear whether the full court will take up the case," LeBeau said. "The Justice Department argued today the Chrysler sale should go through or the automaker could be liquidated. Fiat's CEO said yesterday he would never he would never walk away from the deal, but today Fiat claimed the deal could unravel if it is not approved by Monday. Chrysler claims everyday it spends in bankruptcy is costing the company $100 million."
There was some doubt as to whether or not Fiat walking away was a serious threat to the ultimate deal in the wake of the initial Ginsburg order. Reuters had reported the sentiment that had been said repeatedly by Fiat despite the reports from the three broadcast network - they would not walk away from the, even if the Supreme Court still stood in the way beyond the June 15 deadline.
Bondholders Not Yet Out of Options
The path hasn't completely run its course for the secured creditors in the Chrysler deal. Immediately after the Supreme Court announced it would not hear this case, CNBC's Phil LeBeau appeared on the network's June 9 broadcast of "CNBC Reports" and called it a "win-win day" for the federal government.
However, host Dennis Kneale had his own interpretation of the Supreme Court ruling, stating that he read it to mean this would end the battle between the bondholders and government. LeBeau explained that there were still legal options for the bondholders.
"I don't know if you can ever say anything is permanently over," LeBeau said. "Nothing is to stop the bondholders from going and filing suit in another court and saying, listen, we think that we were not given the actual treatment we deserve - that preferred treatment was given to some of the unsecured creditors. Nothing's to stop the Indiana pension funds from doing that. All that happened today is the Supreme Court merely said that there was not the legal threshold met by the pension funds for at least four of the justices to say, ‘OK, let's bring up this case and discuss the merits of this case.' That's all that was said today, so essentially the stay has been lifted."
Nonetheless after the Supreme Court's decision, pursuing these options doesn't appear as promising as they might have prior to the June 9 announcement.
"If they want to go back and try to stop this in another court, there's nothing to stop this, or stop them, from doing that," LeBeau continued. "They can certainly try to do that. I'm not sure - once you have the Supreme Court basically say we don't see the legal threshold being met, you probably have to think twice about whether you want to try some other action in the court."