The $64,000 questions in my little world today are 1) what to make of Justice Ginsburg’s order temporarily halting the Chrysler sale; and 2) what it means for the General Motors bankruptcy.
My guess is that it would be a mistake to read too much into the Chrysler stay. As a Supreme Court savvy lawyer pointed out to me today, the Justices are very busy these days writing their opinions for the term. The stay may simply be designed to give them time to focus on the case, and decide as a group whether to take it. Unless four of the nine justices conclude that they should, certiorari will be denied. At the end of the day, I suspect that will be what happens, though I hope I’m wrong.
Either way, I think the stay has important implications for the GM bankruptcy. At the least, it suggests that GM and the administration cannot assume that the proposed sale in that case will simply be rubberstamped by the court. In some ways, the proposed “sale” of GM’s key assets to New GM is less troubling than with Chrysler, since the plan will pay GM’s senior lenders in full rather than stiffing them as the Chrysler sale does. But in two respects the rush to effect a quick sale of GM is more problematic. First, whereas with Chrysler the parties could at least pretend it was a sale to a third party (FIAT), the GM sale lacks even the pretence of being a genuine sale. Second, the argument that a sale needs to be done right away is much weaker with GM. I suspect the bankruptcy court will be much less willing than in Chrysler to believe the administration’s claim that the sale needs to go through yesterday.