Pension Funds, Tort Plaintiffs Ask Supreme Court to Delay Chrysler Sale
Posted Jun 8, 2009 6:24 AM CDT
By Debra Cassens Weiss
A group of Indiana pension funds and consumer protection groups have asked the U.S. Supreme Court to grant a stay that would block the sale of Chrysler assets to Fiat.
The request submitted to Justice Ruth Bader Ginsburg, who oversees the New York City-based 2nd U.S. Circuit Court of Appeals, could derail the sale and force a liquidation of the troubled U.S. automaker, according to the Wall Street Journal (sub. req.) and the Washington Post. The deal specifies that Fiat can terminate the agreement if it isn’t completed by June 15. Ginsburg could rule on her own or refer the matter to the entire court.
The pension funds contend the sale unconstitutionally favors junior creditors above senior lenders, which would recover about 29 cents on the dollar under the plan. The Indiana funds bought about $42 million in senior debt about a year ago for 43 cents on the dollar. They also argue that the quick bankruptcy proceedings and the use of federal bailout money to fund Chrysler violated federal law.
A coalition of consumer protection groups and tort claimants are joining the pension funds in seeking the stay, according to the Post. They object to provisions that would bar auto defect claims after Chrysler assets are sold.
Fiat would initially buy a 20 percent stake in Chrysler but could increase its ownership to 51 percent of the company. Other owners would include a health-care trust, the United States and Canada.