Chrysler's supreme test

Chrysler's supreme test

The United States Supreme Court has delayed the sale of automaker Chrysler to the Italian car giant Fiat.

The Court will review the sale to see if its fully legal.

This could throw a major spanner in the works for the Obama Administration’s plans to get Chrysler out of bankruptcy protection with a quick sale to car giant Fiat of Italy.

A bankruptcy judge in New York and a lower court had already approved the deal, pending an appeal.

Now the Supreme Court will weigh in.

A temporary freeze to the merger has been ordered until they decide how to proceed.

The intervention comes after representatives for three pension funds from the Midwestern state of Indiana – funds representing teachers and police officers - sought greater compensation for the portion of Chrysler’s almost seven billion dollar debt they own.

Lawyers acting for the funds claim the U.S. government engineered the sale - rushing it through in the hope there wouldn’t be time for any complaints … a process they say was unreasonable given the size of the bankruptcy proceedings.

The Indiana state treasurer argued that the Obama administration illegally used federal bailout money - the so called TARP - earmarked for financial institutions to help Chrysler.

It’s not known how long the U.S. Supreme Court will take to conduct its review of the Chrysler sale to Fiat.

It could be days, weeks or even months .. the justices are not known to rush their decisions.

The Obama Administration has set June 15th as the deadline for the sale …and Fiat says it’ll walk away from the deal if its not completed by then.

But the Indiana sate pension fund representatives argue that the Italian vehicle maker is unlikely to pull out because its getting an American icon for a rock bottom price.

- John Terrett, New York Correspondent