The delay could spell disaster for the near-term profitability of the Chrysler-Fiat deal, which had been initially approved by a U.S. bankruptcy judge last week. Judge Gonzalez, who wrote the bankruptcy decision, said that the only alternative to approval of the sale would be 'immediate liquidation' of the company's assets.
With the sale now on hold, debts and expenses continue to mount, pressing the timeliness of the purchase even further to the forefront. The rate of the cash burn is about $100 million a day in bankruptcy, thanks in part to a complete shutdown of production, reports The Detroit News.
Fiat has the right to walk away from the table if Chrysler isn't out of bankruptcy by June 15, but Marchionne isn't turning away despite the huge - and now extended - cash bleed. In an interview with Bloomberg, Marchionne said Fiat would 'never' walk away from the deal, and that "We [Fiat] should just be patient and let the system work."
Justice Ruth Bader Ginsburg issued the delay order without stating a reason, but blocking the transfer of the company's valuable assets into a new company to be owned in part by Fiat.
The mechanics of the hold require Chrysler to stay in bankruptcy until the decision whether to hear the creditors' case is made. If the Supreme Court does decide to take on the appeal of the bankruptcy court's decision, expect an even lengthier delay.