Court Gives Indiana Funds More Time to Appeal Chrysler
Sale
June 5, 2009 (PLANSPONSOR.com) - A federal appeals
court approved the sale of Chrysler assets to Fiat but kept
the deal on hold until Monday to allow a possible appeal to
the Supreme Court, the Wall Street Journal reports.
The 2
nd
U.S. Circuit Court of Appeals heard an appeal filed by a
group of Indiana state pension and investment funds,
which had sought to block the deal (see
Court Agrees to Hear Indiana Funds'
Chrysler Appeal
). The carmaker's proposed restructuring
seeks to pay billions of dollars to unsecured Chrysler
creditors, while paying secured creditors only 29 cents
on the dollar
Previously, U.S. District Judge Thomas Griesa
denied a motion by The Indiana State Teachers' Retirement
Fund, Indiana State Police Pension Trust, and Indiana
Major Moves Construction Fund that the government did not
have the authority to provide funds to Chrysler for its
proposed sale. Griesa also denied a request to prevent
Chrysler's scheduled sale hearing in bankruptcy court
from going forward
Chrysler had hoped to close the sale by the end of
this week.
UPDATE
The Wall Street Journal reports that late on Saturday, the
Indiana pension funds - the Indiana State Teachers
Retirement Fund, the Indiana State Pension Trust and the
Indiana Major Moves Construction Fund - asked for an
emergency stay request from the U.S. Supreme Court after
the 2nd U.S. Circuit Court of Appeals in New York approved
the acquisition of most of Chrysler's assets by Fiat.
Earlier the sale was approved last week by a U.S.
bankruptcy judge.
According to the WSJ, the stay requests asks for the
extension of a temporary hold on the sale put in place by
the appeals court until Monday at 4 p.m. EDT or when the
high court decides whether to intervene.
"The court will be deprived of the opportunity to decide
critical, nationally significant legal issues relating to
management of the economy by the United States government,"
the funds said in their stay request. "Chrysler's
bankruptcy carries profound implications for the nation's
economy. Nearly everyone will feel the impact."
The pension funds have argued that the proposed sale to
Fiat is unconstitutional because it puts the rights of
junior creditors ahead of the rights of senior lenders.
The WSJ notes that emergency stays are rarely granted by
the Supreme Court, but that if it were to be, the Chrysler
deal with Fiat could be delayed for weeks or months while
the issue is pending at the high court. That would buy time
for the pensions and consumer groups to lodge a formal
appeal at the high court, and the WSJ said both plan to
file separate challenges in coming days.
Rebecca Moore
editors@plansponsor.com