IN Pension Funds Won't Get Chrysler Case Moved to District Court

May 27, 2009 ( - In a second legal defeat, a U.S. federal judge denied a request by a group of Indiana public funds to delay bankrupt automaker Chrysler LLC's sale hearing and remove the bankruptcy case to district court.

Reuters reports that on Tuesday, 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.

U.S. Bankruptcy Judge Arthur Gonzales previously denied the funds’ request to halt the asset sale to Italy’s Fiat Group SpA (see Indiana Pension Plans Lose Shot at Blocking Chrysler Asset Sale ).

Griesa said that once the bankruptcy judge rules on Chrysler’s sale, the objecting parties should have a “fair” opportunity to appeal that decision, according to Reuters. He also issued an order that said the bankruptcy court was able to interpret non-bankruptcy statutes such as the Emergency Economic Stabilization Act of 2008, which established the Troubled Asset Relief Program (TARP).

“At this late stage, when the Bankruptcy Court is nearing the completion of its work, it would be disruptive to remove the issues from a bankruptcy judge who has the background and is ready to complete his work,” Griesa wrote, according to the new report.

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 ).