WASHINGTON – Three Indiana state pension and construction funds want the Supreme Court to block Chrysler's sale to Fiat so they can pursue an appeal in hopes of getting a better deal.
The funds filed emergency papers at the high court early Sunday.
An appeals court in New York approved the sale Friday, but gave objectors until Monday afternoon to try to get the Supreme Court to intervene. Chrysler LLC wants to sell the bulk of its assets to a group led by Italy's Fiat Group SpA as part of its plan to emerge from bankruptcy protection.
The emergency request went first to Justice Ruth Bader Ginsburg, who handles such matters from New York. She can act on her own or refer it to the entire court.
The Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund and the state's Major Moves Construction Fund claim the deal unfairly favors the interests of Chrysler's unsecured stakeholders ahead of those of secured debtholders such as the funds.
The funds also challenged the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program (TARP) to supply Chrysler's bankruptcy protection financing. They say the government did so without congressional authority.
The government-sponsored reorganization of the U.S. auto industry, including the Chrysler bankruptcy proceedings, "is a matter of incredibly high profile and importance," the funds said in their request to the high court. "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."
U.S. Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler's case, approved the sale last Sunday, finding that the deal with Fiat was Chrysler's only alternative to liquidation.
The appeals court halted the sale on Tuesday, allowing the funds to appeal Gonzalez's decision. That court ruled against the funds on Friday, but continued to delay the sale so the funds could go to the Supreme Court.
Chrysler had hoped to close the sale by the end of this past week.
Auburn Hills, Mich.-based Chrysler has maintained that the sale must be completed quickly to save the automaker from complete collapse. If the deal doesn't close by June 15, Fiat has the option of pulling out. Production at Chrysler's manufacturing plants remains halted pending the closing of the sale.
Chief Judge Dennis Jacobs of the New York-based appeals court asked Thomas Lauria, the lawyer representing the Indiana funds, why he believed his clients would be better off if the deal with Fiat went away and Chrysler was forced to liquidate.
"You can't wait for a better deal to come in from Studebaker," Jacobs said.
Lauria responded that the sale could be restructured to provide a better return for the secured debtholders.
U.S. automaker Studebaker Corp. closed in 1963.