Tuesday, June 9, 2009
The quick and tidy sale of Chrysler to Fiat has been delayed by at least one day while the Supreme Court decides whether to hear an appeal of the deal. Secured creditors were understandably pissed off at the raw deal they were handed during the government-led restructuring plan. I'm no legal expert, but the whole idea of changing the order of priority in bankruptcy by handing unsecured creditors a big piece of the pie before secured creditors are paid out is not just wrong, but is a threat to the integrity of our financial markets. Markets have rules for a reason. If you interfere and change the rules too much, at some point nobody is going to want to show up to play anymore. No telling what the Supreme Court does next. They could just allow the stay to expire, in which case, Chrysler's sale to Fiat goes through. Or alternatively, the Supreme could hear the appeal, Fiat could walk away, which would lead to a Chapter 7 style liquidation. I don't know about you, but I'm sitting on pins and needles.