Should the Supreme Court kill Fiat's deal to buy Chrysler?

Remember Chrysler? It makes Jeeps, minivans, and such and was bailed out by the U.S. in 1979. But in May 2007 a private equity firm, Cerberus Capital, bought an 80.1 percent stake in Chrysler from Daimler for $7.4 billion, installed the CEO who smashed up Home Depot (HD), Bob Nardelli, as Chrysler CEO and he drove it into a wall -- it filed for bankruptcy this April 30.

But the U.S. decided that Chrysler could not simply be liquidated. So it lent $8 billion and negotiated a deal to sell its best assets to Fiat -- which would initially give Fiat 20 percent of the new company, with the option to hike its stake to 51 percent; the UAW health-care trust would initially get a 55 percent stake, while the U.S. and Canada, which are lending Chrysler $4.9 billion during the bankruptcy, would own 8 percent and 2 percent, respectively. Senior lenders owed $6.9 billion would get 29 cents on the dollar.

The bankruptcy court approved the deal last Monday and the 2nd U.S. Circuit Court of Appeals in New York approved it verbally on Friday. But midnight on Saturday a group of Indiana pension funds -- which own about $42 million of the senior debt for which they paid 43 cents on the dollar -- appealed to the Supreme Court to stop the deal -- and if the Supreme Court decides to take the case -- it could delay the deal beyond June 15th -- giving Fiat a chance to pull out.