The Supreme Court has put the brakes on President Obama’s plans to bail out the auto industry, ordering a stay of the sale of Chrysler to Fiat. Before the ruling, the administration said blocking the deal would have “grave consequences” for Chrysler. Also, it could threaten the government’s plans for the much larger and more complicated GM.

Update: The Court has lifted the stay.


Solicitor General Elena Kagan said that blocking the sale could force Chrysler into liquidation.

Chrysler had filed for bankruptcy protection on April 30 and had aimed to complete the sale and alliance with Fiat within 60 days.

The Chrysler case could also set a precedent for General Motors, which entered bankruptcy protection on 1 June.

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