Supreme Court Justice Ruth Bader Ginsburg has temporarily delayed Chrysler's sale to Fiat. Ginsburg says in an order Monday that the sale is "stayed pending further order."
The action indicates that the delay may only be temporary. Chrysler has said a delay could scuttle the deal.
A federal appeals court in New York had earlier approved the sale, but gave opponents until 4 p.m. EDT Monday to try to get the Supreme Court to intervene.
Ginsburg issued her order just before 4 p.m., when Chrysler would have been free to complete the sale of most of its assets to Fiat.
Ginsburg could decide on her own whether to extend the delay or ask the full court to decide. It is unclear when she or the court will act.
Indiana pension funds and consumer groups had asked the Supreme Court on Sunday to stop the sale of Chrysler while they challenged the deal.
Earlier on Monday, the Obama administration urged the Supreme Court to allow the sale, saying that blocking the deal would have "grave consequences."
Chrysler claims the deal with Fiat is a critical part of its plan to emerge from Chapter 11 bankruptcy protection. Fiat has the option of pulling out of the agreement if the sale does not close by June 15, which could leave Chrysler with no other option but to liquidate.
But the Indiana funds, which hold a small part of Chrysler's secured debt, claim the sale as structured unfairly favors Chrysler's unsecured stakeholders ahead of secured debtholders like the funds.
As part of Chrysler's restructuring plan, the company's secured debtholders will receive $2 billion, or about 29 cents on the dollar, for their combined $6.9 billion in debt. The Indiana funds bought their $42.5 million in debt in July 2008 for 43 cents on the dollar.
The funds also are challenging the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program to supply Chrysler's bankruptcy protection financing. They say the government did so without congressional authority.
The consumer groups and individuals with product-related lawsuits are contesting a condition of the Chrysler sale agreement that would release the company from product liability claims related to vehicles it sold before the "New Chrysler" partnered with Fiat is created.
Individuals with claims against "Old Chrysler" would have to seek compensation from the parts of the company not being sold to Fiat. But those assets have limited value and it's doubtful that there will be available to pay consumer claims.
The appeals come as Congress intensifies its scrutiny of the Obama administration's government-led restructuring of Chrysler and General Motors Corp.
The Senate Banking Committee said it planned to call Ron Bloom, a senior adviser to the auto task force, and Edward Montgomery, who serves as the Obama administration's director of recovery for auto communities and workers, to a hearing Wednesday.
Sen. Christopher Dodd, D-Conn., the committee's chairman, planned to review the use of TARP funds to help the auto companies and look at whether taxpayers will receive a return on their investment.
Meantime, a senior Obama administration official says Fiat SpA will shake up management and change the culture of Chrysler if the courts allow the sale of its assets to the Italian automaker.
The official says management changes will go deeper than the departure of CEO Bob Nardelli and Vice Chairman Tom LaSorda. The official spoke on condition of anonymity because the changes have not been made public.
(Copyright 2009 by The Associated Press. All Rights Reserved.)