High court rejects challenge to Chrysler's sale

Supreme court dismisses three Indiana state pension funds' appeal to Chrysler's bankruptcy and sale to Fiat.

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WASHINGTON (CNN) -- The Supreme Court again Monday turned away the latest challenge to Chrysler's bankruptcy and sale to Italian automaker Fiat.

The justices declined an appeal filed by three Indiana state pension funds which hold a portion of Chrysler's nearly $7 billion in secured debt. The court said the issue is moot since the Chrysler sale was formally completed six months ago.

The three funds -- representing police officers and teachers -- sought greater compensation for their share of the debt.

A federal appeals court -- as well as a bankruptcy judge -- approved the sale of the Chrysler assets.

The financially troubled domestic automaker had filed for bankruptcy April 30, and at the time pinned its future on the restructuring plan pushed by the White House.

Chrysler had been trying to leave behind its debt as part of the Chapter 11 process, a step that would wipe out much of the Indiana pension funds' holdings.

The funds held about $42 million, or less than 1%, of Chrysler's debt.

Lawyers for the funds argued to the Supreme Court that the Obama administration improperly used money from a federal bailout to help Chrysler. That money was designed, they say, to help only struggling financial institutions.

Indiana Treasurer Richard Mourdock said the pension funds are secured creditors and, therefore, deserved a say in the outcome. They said they were no longer were seeking to block the sale but simply wanted to recover money for their investors.

Both Chrysler and the federal government said the sale to the Italian automaker had to be completed quickly to ensure domestic jobs were not lost and to keep Chrysler financially afloat for the long term.

The Justice Department, in a filing with the high court, said the president had the authority to tap into the Troubled Asset Relief Program (TARP) to help Chrysler. "As an economic matter ... blocking the transaction would undoubtedly have grave consequences," wrote Solicitor General Elena Kagan.

The deal with Fiat and Chrysler was finalized in June, but legal appeals continued. The new company for now is to be owned jointly by the federal government, an autoworker's union retiree fund and Fiat.

The case is Indiana State Police Pension Trust v. Chrysler LLC (09-285). To top of page

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