WASHINGTON - The Supreme Court has cleared the way for Chrysler's sale to Fiat, turning down a last-ditch bid by opponents of the deal.
The decision came the same day that a bankruptcy judge in New York approved the automaker's plan to terminate dealer franchises.
The high court said late yesterday that it had 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.
The opponents include a trio of Indiana pension plans, consumer groups and individuals with product-related lawsuits.
A federal appeals court in New York had a few days earlier approved the sale, but had given 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.
Now the court has freed the automakers to complete their deal.
In the bankruptcy case in New York, U.S. Judge Arthur Gonzalez yesterday approved Chrysler's plan to terminate 789 of its dealer franchises.
Gonzalez's order says the franchises, which represent about 25 percent of Chrysler's dealer base, can no longer act as authorized Chrysler, Dodge and Jeep dealers, effective immediately.
Earlier in the day, more than 25 attorneys representing hundreds of dealers from across the country argued in court that little would be gained by terminating the franchises, while Chrysler maintained that the move was a necessary part of its plan to cut costs and quickly emerge from Chapter 11.
At yesterday's hearing, Chrysler attorneys also said the automaker would extend until Monday its program to help the affected dealers send any unsold vehicles to other dealers.
Fiat had the right to walk away from Chrysler after June 15 and leave the U.S. automaker with little option but to liquidate. But a Fiat spokesman had said yesterday that Fiat would not turn its back on a deal despite the Supreme Court stay.
But Chrysler and Fiat also said that the sale agreement would terminate automatically if the sale doesn't close by the deadline, and there was no guarantee that they could negotiate a new deal.
The perilous condition of Chrysler and its Detroit rival General Motors Corp. yesterday spurred the House to approve a "cash for clunkers" bill to boost auto sales. It would allow consumers to turn in their gas-guzzling cars and trucks for a $4,500 voucher for more fuel-efficient vehicles.