The SCOTUS decided not to hear the claim of misapplication of bankruptcy law from the Indiana Fund bondholders in the Chrysler restructuring.

At least four of the nine judges had to have seen cause to hear the case for it to move to the full Court, and four could not be found.

So the Chrysler-Fiat deal will proceed and the secured bondholders will get their 29 cents on the dollar, while the UAW gets more.

Note this spin on the story in an article titled “Why Chrysler’s Bondholders Should Stop Whining” written by Floyd Norris of the New York Times:

That [referring to the article’s title] is the response from many on Wall Street to the Obama administration’s rescue plan for Chrysler. The union is being treated better than the bondholders, and that is said to violate decades of bankruptcy law traditions. If this were a normal bankruptcy, that complaint might be justified. But this one is far from normal.

The relevant law, it seems to me, is not bankruptcy but charity. Uncle Sam is acting as a philanthropist coming to the aid of a dying corporation. If this were Bill Gates choosing to fund public health agencies in Kenya but not Ethiopia, we might question his judgment, or try to persuade him to change his mind, but no one would argue he had a legal obligation to spread the money around.