Judge Ye Not Chrysler, Lest GM Also Be Judged

Justice Judith Bader Ginsburg issued a writ today, stalling the sale of major assets by Chrysler to Fiat. This writ was issued based on a case brought before The Court by a group of pension and construction funds in Indiana who stand to lose millions of dollars from lost investment in Chrysler secured bonds (or loans).  
Normally such secured credit holders are the first to be paid off in bankruptcy proceedings, but in the case of Chrysler, these bond holders were in fact placed at the end of the line (or not in the line at all). The interesting part about the action brought on behalf of these pensions funds is the two-prong attack:  

1. Why were normal bankruptcy procedures bypassed in this situation by the lower courts, and was it do due to improper pressure brought to bear by the government?
2. The funds used by the federal government to prop up Chrysler prior to bankruptcy and the reason that the federal government has had so much to say about how reorganization would work were taken from the TARP funds.  

For those of you who can't remember all the way back to the last months of the Bush Administration, TARP funds were originally designed to buy toxic assets from banks (hence the name Toxic Asset Relief Program). While actually never used to buy any toxic assets, the funds were generally understood to be used for the bailout of the banking industry. Congress, recognized that TARP funds might not be able to be used for bailing out automobile makers however when that situation appear imminent, and tried to get a separate bailout package passed for that purpose. They were unsuccessful in doing so. 

Ignoring the legislative defeat however, the Administration at the time simply decided to take the money from TARP anyway. Since the fund had no real Congressional oversight in place, they were able to apply it where and how they saw fit. If the Supreme Court now rules that TARP funds were used improperly for one bailout, then obviously they would have been used improperly for both. 

If this turns out to be the case, how will both companies give back money that has already been spent to a government that doesn't want it? An equally interesting part of this is case is not just what happens to these bond holder pension funds and to Chrysler as a result, but what impact this could have on the bankruptcy re-emergence of General Motors, whose bond holders were likewise given short shift when asset reallocation was performed and approved. Not only could this case re-establish the rule of law where these auto bankruptcies are concerned, it could also prove a serious roadblock to the Obama Administration's continued attempts to take oversight control of operation and reorganization of private sector companies. (Can you say medical insurance?)  

We will all be waiting and watching with great interest ...  

Update:

The Court turned down hearing the petition and more's the pity. There seems to be no brakes on this runaway train of government.