Indiana pension funds urge court to delay Chrysler sale
Published: June 7, 2009
Updated 8 months ago
WASHINGTON – A group of Indiana pension funds opposed to Chrysler’s sale to Fiat has filed an emergency appeal with the US Supreme Court to immediately halt the sale.
The emergency stay request was filed shortly before midnight Saturday and came after the 2nd US Circuit Court of Appeals in New York approved the acquisition of most of Chrysler’s assets by a group led by Italy’s Fiat.
The stay request asks for the extension of a temporary hold on the sale put in place by the appeals court until 4:00 pm (2000 GMT) Monday or when the high court decides whether to intervene.
“Absent a stay, 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 pension funds said in their application.
They argued that the sale is unconstitutional because it puts the rights of junior creditors ahead of the rights of senior lenders.
The three state pension and construction funds also said the US Treasury Department has overstepped authority granted by Congress under the Troubled Asset Relief Program (TARP), a 700-billion-dollar bailout intended for the financial industry, by financing Chrysler’s restructuring.
“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,” lawyers for the funds and the Indiana attorney general wrote in their filing.
“The issues presented by this case are of immediate — and enduring — national significance.”
On Friday, a three-judge panel from Second Circuit Court of Appeals dismissed the challenge from the state pension funds and upheld a decision by a New York bankruptcy judge approving the US government-backed plan to create a new entity to buy the assets of the troubled number three American automaker.
Under the planned tie-up with Fiat, the new firm would be majority owned by the United Auto Workers (UAW) union, with small stakes by the US and Canadian governments, which would contribute some 10.5 billion dollars to the venture.
Emergency stays are rarely granted by the Supreme Court. But if the request were approved, the Chrysler deal with Fiat could be delayed for weeks or months while the issue is pending at the high court because a stay extension would buy time for the pensions funds to lodge a formal appeal at the high court.
Fiat can pull out of the deal if it does not go through by June 15.
It could also have an impact on General Motors, once the world’s biggest automaker, which is now seeking a quick sale similar to that of Chrysler for its bankruptcy filing in a New York court.
Justice Ruth Bader Ginsburg would handle the filing, as emergency motions from the appeals court in New York fall under her authority.
She could rule herself or refer the motion to the entire court. Ginsburg can also reject the appeal outright or request other parties involved in the case file briefs.
One comment
Printer Friendly |
Email
| Get breaking news alerts: Email/mobile |
My friends and others have talked about how the only way this bankruptcy (both of Chrysler and GM) would have to be done essentially illegally. The pension and bondholders have a viable argument about them being second in line for getting a better deal than unsecured debtors (unions, common etc.). The administration forced the Federal judges to push this through regardless of how it went against established law in regard to bankruptcy. They make the comment that if not then the company will liquidate. Well, yea it will liquidate. Thats what happen when a company can’t pay it’s debt’s. The bondholders and the secured debtors will get what they can from liquidation (which will be alot more than what they would have gotten and what they are getting know) and the unsecured will get whats left (common, workers etc.). They are saying that regardless of what the law says, save this company so that we won’t have to deal with the repercussions of the liquidation (the fed having to take care of hte hundreds of thousands of people who are retired or fired).
That shouldn’t matter to the law. The bankruptcy judge overruled over 386 separate entities objections to the chrysler/fiat deal in two days, thats BS. He was told to not judge against this. Then the appeal court said no to even a stay, so thats why they went to the Supreme Court.
Thats the problem with the US people and the Govt. actually, when the rules you have made goes against you, you try to change them mid-game. The govt. is trying to change the rules in order to get the results they want. I feel sorry for the near future for businesses trying to get investors (even these companies) next time. Because they will see what they did to these “secured” investors and won’t invest in anything they sell because they don’t want to lend money to something that the govt. can force the courts to make the ruling favor not them.