Administration June 3, 2009

Court Agrees to Hear Indiana Funds' Chrysler Appeal

June 3, 2009 (PLANSPONSOR.com) - The 2nd U.S. Circuit Court of Appeals said it would hear an appeal by a group of Indiana public funds challenging the sale of most of Chrysler's assets to the company's proposed partner, Fiat SpA of Italy.
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The sale to Fiat was approved June 1 by U.S. Bankruptcy Judge Arthur Gonzalez who decided the sale order should be heard by the 2 nd Circuit, saying that skipping the district-court level “is appropriate because this case involves a matter of public importance, and an immediate appeal may materially advance the progress of this case,” the Wall Street Journal reports. The pension funds hold about $42 million of Chrysler’s $6.9 billion in secured debt.

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 on Wednesday from going forward (see IN Pension Funds Won’t Get Chrysler Case Moved to District Court ).

The bankruptcy judge previously denied the funds’ request to halt the asset sale to Fiat SpA.

State Treasurer Richard Mourdock says the state cannot allow its “retired police officers and teachers to be ripped off by the federal government.” The proposed restructuring seeks to pay billions of dollars to unsecured Chrysler creditors, while paying secured creditors only 29 cents on the dollar (see IN State Treasurer Says Pension Funds “Ripped Off” by Chrysler Bankruptcy ).

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