Original source:
Three Indiana state pension and construction funds filed emergency papers at the US High Court today to force the Supreme Court to block Chrysler’s sale to Fiat so they can appeal in the hope of getting a better deal.
An appeals court in New York approved the sale on Friday, but gave objectors until tomorrow afternoon to try to get the Supreme Court to intervene.
Chrysler wants to sell the bulk of its assets to a group led by Italy’s Fiat Group SpA as part of its plan to emerge from bankruptcy protection.
The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund claim that the deal unfairly favours the interests of Chrysler’s unsecured stakeholders ahead of those of secured debtholders such as the funds.
The funds also challenged the constitutionality of the Treasury Department’s use of money from the Troubled Asset Relief Programme to supply Chrysler’s bankruptcy protection financing.
The government-sponsored reorganisation of the US auto industry, including the Chrysler bankruptcy proceedings, ‘is a matter of incredibly high profile and importance,’ the funds said in their request to the high court.
Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler’s case, approved the sale last Sunday, finding that the deal with Fiat was Chrysler’s only alternative to liquidation.
The appeals court halted the sale on Tuesday, allowing the funds to appeal against judge Gonzalez’s decision.
That court ruled against the funds on Friday, but continued to delay the sale so the funds could go to the Supreme Court.
Chrysler had hoped to close the sale by the end of this past week.
Chrysler has maintained that the sale must be completed quickly to save the carmaker from complete collapse.
If the deal doesn’t close by June 15, Fiat has the option of pulling out.
Production at Chrysler’s manufacturing plants remains halted pending the sealing of the sale.
Chief Judge Dennis Jacobs of the New York-based appeals court asked Thomas Lauria, the lawyer representing the Indiana funds, why he believed his clients would be better off if the deal with Fiat went away and Chrysler was forced to liquidate.
Mr Lauria responded that the sale could be restructured to provide a better return for the secured debtholders.
Comments