Court OK’s Chrysler’s purchase

WASHINGTON — The Supreme Court on Tuesday cleared the way for Chrysler LLC’s sale to Fiat, turning down a last-ditch bid by opponents that included consumer groups and three Indiana pension plans.

The court rejected a plea to block the sale of most of Chrysler’s assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court’s intervention could have scuttled the sale.

“We’re very excited. We were waiting for this good news. It’s what needs to happen for (Chrysler) to stay alive,” said Josh “Chop” Towbin, general manager and co-owner of Towbin Dodge and the top seller of new vehicles from Chrysler in Nevada.

Fiat can produce small cars that are efficient users of gasoline, and that is important to many customers of Towbin Dodge who are price conscious, Towbin said.

In addition, Fiat has strong sales overseas where Chrysler was weak, he said.

Earlier Tuesday, a bankruptcy court in New York gave Chrysler approval to terminate 789 dealer franchises.

More than 25 attorneys representing hundreds of dealers from across the country opposed Chrysler’s request, arguing that little would be gained by ending the franchises. The company said the move was a necessary part of its plan to cut costs and quickly emerge from Chapter 11 bankruptcy.

U.S. Judge Arthur Gonzalez’s order says the franchises, which represent about 25 percent 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.

Many of the dealers were selling the last cars on their lots and preparing to shut their doors for good at the end of the day, while others planned to sell used cars or other brands after severing ties with Chrysler.

At Tuesday’s hearing, Chrysler attorneys said the automaker offered to extend until Monday its program to help the affected dealers send any unsold vehicles to other dealers.

Jim Marsh, one of the terminated dealers, said he can no longer sell Chrysler vehicles after Tuesday. Jim Marsh Automotive dropped Chrysler and Jeep from its name and now does business as Jim Marsh Kia Suzuki Mitsubishi.

Marsh said he sold about 125 new vehicles at cost over the last 90 days, but said he would not go below that price, because the remaining Chrysler dealers will pay that price.

He counted less than 20 new Jeeps and Chrysler in his inventory on Tuesday afternoon.

“We’ve actually bought a lot of inventory from these (terminated) dealers already,” Towbin said. Many Towbin Dodge customers want to buy from a dealer where they will get service, he said. Terminated dealers cannot do warranty work for Chrysler.

A federal appeals court in New York had earlier approved the sale of Chrysler to Fiat, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene.

Justice Ruth Bader Ginsburg ordered a temporary delay just before a 4 p.m. deadline on Monday.

A little more than 24 hours later, the court freed the automakers to complete their deal.

The opponents included a trio of Indiana pension plans, consumer groups and individuals with product-related lawsuits.

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.

Chrysler has been working to complete the sale of its assets to Fiat before a June 15 deadline, a key element in its restructuring plans.

The pension plans seized on comments from Fiat officials that they would not walk away from the deal even if June 15 were to pass without completing the sale. The plans tried to persuade the justices that there was no reason to rush to meet that deadline.

But Chrysler, Fiat and the Obama administration stressed in response that Chrysler was losing $100 million a day and that the deal automatically terminates in less than a week, with no guarantee that a new agreement would be reached.

The court did not consider the merits of the opponents’ arguments, only whether to hear their full-blown appeal.

Review-Journal writer John G. Edwards contributed to this report.

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