3 funds want better Chrysler deal
Indiana state fund officials want the Supreme Court to block the impending sale to Fiat.
WASHINGTON - Three Indiana state pension and construction funds want the U.S. Supreme Court to block Chrysler's sale to Fiat so they can pursue an appeal in hopes of getting a better deal.
Also filing emergency papers at the high court yesterday were lawyers representing consumer groups and individuals with product-related lawsuits.
An appeals court in New York approved the sale Friday, but gave objectors until this afternoon to try to get the Supreme Court to intervene. Chrysler L.L.C. wants to sell the bulk of its assets to a group led by Italy's Fiat S.p.A. as part of its plan to emerge from bankruptcy protection.
The emergency requests went first to Justice Ruth Bader Ginsburg, who handles such matters from New York. She can act on her own or refer it to the entire court.
The Indiana State Police Pension Fund, the Indiana Teachers Retirement Fund, and the state's Major Moves Construction Fund claim the deal unfairly favors the interests of Chrysler's unsecured stakeholders ahead of those of secured debt holders such as the funds.
The funds also challenged the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program to supply Chrysler's bankruptcy-protection financing.
They say the government did so without congressional authority.
The government-sponsored reorganization of the U.S. 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.
"The public is watching and needs to see that, particularly when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch."
The second request contests a condition of the sale agreement that would release the new company from pending and future product-liability claims related to vehicles sold before it was established.
Those with claims against "Old Chrysler" would have to seek compensation from the parts of the company not being sold to Fiat. But those assets have limited value, and it is doubtful they would have enough money to pay claims.
U.S. Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler's case, approved the sale May 31, finding that the deal with Fiat was Chrysler's only alternative to liquidation.
The appeals court halted the sale Tuesday, allowing the funds to appeal Gonzalez's decision. That court ruled against the funds Friday, but continued to delay the sale so they could appeal to the Supreme Court.
Chrysler had hoped to close the sale by the end of last week.
Chrysler, based in Auburn Hills, Mich., has maintained that the sale must be completed quickly to save it from complete collapse. If the deal does not close by next Monday, Fiat has the option of pulling out. Production at Chrysler's manufacturing plants remains halted pending the closing of the sale.