Tuesday, June 09, 2009
Court asked to stop Chrysler sale
Pension funds opposed to Chrysler's sale to Fiat have asked the US Supreme Court to block the deal immediately.
Three Indiana state pension and construction funds filed papers at the court on Sunday calling for the sale to be halted so they can pursue an appeal.
It comes after a US appeals court approved Chrysler's sale to a group led by Fiat, a union-aligned trust and the US and Canadian governments.
Chrysler entered bankruptcy protection in April after falling vehicle sales.
US carmakers have suffered from a massive slump in sales during the recession.
Fund assets
The US government has backed its sale to the Fiat-led consortium, which would see it emerge from bankruptcy.
Fiat would control 20% of Chrysler, while 68% would be owned by a union trust, and the two governments would share 12%.
However, the pension funds, which hold about $42m (£26.3m) of Chrysler's $6.9bn in secured loans, are opposed to the sale.
They say it inverts usual bankruptcy practice and unlawfully rewards unsecured creditors, such as the union, ahead of secured lenders.
'Critical issues'
The emergency legal request from the Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund and the state's Major Moves Construction Fund goes before Justice Ruth Bader Ginsburg.
It calls for a block on the sale until 1600 local time in New York (2100 BST) on Monday.
The judge can act on her own or refer the matter to the full court, when a vote from five of the nine Supreme Court members would be needed to put the Chrysler sale on hold.
The legal filings call on the court to "decide critical, nationally significant legal issues relating to management of the economy by the United States government".
"The public is watching and needs to see that, particularly, when the system is under stress, the rule of law will be honoured and an independent judiciary will properly scrutinise 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."
If the sale is put on hold by the court, the Indiana funds would then pursue a full appeal.
If the deal is not completed by 15 June then Fiat, which is not paying anything for its 20% stake, has the option of pulling out.
DATED: 09.06.09
FEED: AW
