Washington, D.C. – Chrysler has won a victory in the U.S. Supreme Court, which rejected a request from Indiana pension funds that would have otherwise held up the automaker’s exit from bankruptcy, according to Automotive News. The funds had asked the court to delay the sale of Chrysler to Fiat SpA while the challenge stood.
The Supreme Court said the challengers had not met their burden of showing that a delay was justified, and lifted a temporary stay of the sale granted by Supreme Court Justice Ruth Bader Ginsburg on Monday. A federal bankruptcy judge and a U.S. appeals court have approved the sale of Chrysler to Fiat.
In a separate case, Chrysler won court approval to cut its U.S. dealer network by one-quarter. A bankruptcy court judge rejected requests to delay the order until the Supreme Court ruled on the company’s sale.
“We are pleased with the judge’s decision allowing us to go forward with the realignment of our dealer network,” said Jim Press, Chrysler vice-chairman and president. “A financially strong, competitive dealership network can increase sales and afford to invest in facilities, in people, in training, and in amenities, with a major focus placed on customer satisfaction. The 2,392 U.S. dealers that will move forward will be integral to the success of the new Chrysler.”
Press called the decision about which dealers to bring into the new company “gut-wrenching,” but said it was an absolutely essential part of the effort to assure the long-term viability of the new Chrysler Group. The company said that cutting 789 dealers will save the company about US$1.4 billion over four years in product engineering and development costs for “sister vehicles” sold under different brand names, along with $150 million annually in marketing and advertising costs, and $33 million annually in administrative costs. Chrysler will redistribute 100 per cent of the eligible inventory held by the dealers.
Rejected dealers will be able to file damage claims against Chrysler within a certain time frame yet to be determined, the court said in its ruling.