Chrysler-Fiat to head to Supreme Court
Troubled automaker moves closer to deal with Italian company, but Indiana pension funds appeal to Supreme Court in last attempt to stay sale.
NEW YORK (CNNMoney.com) -- A group of Indiana pension funds has made a last-minute effort to block Chrysler's deal with Italian automaker Fiat.
An appeals court Friday upheld Chrysler LLC's plan to exit bankruptcy.
The ruling backs the formation of a new company that will be owned jointly by the U.S. government, an autoworker's union retiree fund and Fiat.
The deal will go through on Monday afternoon unless the Supreme Court intervenes, Chrysler attorney Corinne Ball told CNN.
But late Saturday, the group of Indiana pension funds that are seeking to block the deal filed an emergency appeal with the Supreme Court asking for a stay in the sale to Fiat.
The request was filed with Supreme Court Justice Ruth Bader Ginsburg. She could act on her own or refer the case to the remainder of the court. A stay from the full court would require a majority of the court's nine members.
"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 funds said in their stay application.
Indiana Treasurer Richard Mourdock had appealed the ruling of a federal bankruptcy court on May 31 allowing Chrysler to sell its best-performing assets, including factories and dealerships, to a new company called the Chrysler Group.
Mourdock made his appeal on behalf of three pension funds -- for Indiana teachers and state police, as well as a "Major Moves" construction fund. The funds hold about $42 million, or less than 1%, of Chrysler's $6.9 billion debt.
Chrysler applauded the court's decision to uphold the sale, saying it "appreciates its recognition of the need for a swift conclusion to this process so we can quickly begin building the new company."
The automaker has been trying to leave behind its debt as part of the Chapter 11 process, which would wipe out part of the pension fund's holdings. It filed for Chapter 11 on April 30.
The Chrysler Group would be comprised by several major stakeholders. The biggest share, of 55%, would be controlled by a United Auto Workers union trust. The Italian automaker Fiat would own 20% initially, though this share could eventually increase. A minority stake of 8% would go to the U.S. government, and 2% would be held by the federal and provincial governments of Canada and Ontario.
Mourdock said the pension funds are secured creditors and therefore they deserve a place at the table. White & Case, the prominent law firm representing his appeal, is arguing that the bankruptcy court ignored various legal points in approving the asset sale.