Appeals court to hear argument vs. Chrysler sale

Lawyer Blogs

The decision on whether Chrysler can sell the bulk of its assets to a group led by Italy's Fiat as part of its plan to emerge from bankruptcy protection heads to a federal appeals court Friday.


The 2nd U.S. Circuit Court of Appeals is to hear arguments Friday afternoon from attorneys representing Chrysler LLC, Fiat Group SpA and a trio of Indiana state pension and construction funds, the latter of which say the deal unfairly favors the interests of the company's unsecured stakeholders ahead of those of secured debtholders such as themselves.

Late Tuesday, the appeals court halted the sale pending the Indiana state funds' appeal. Chrysler had hoped to close the sale by the end of this week.

Auburn Hills, Mich.-based Chrysler has maintained that the sale is its only hope of avoiding selling itself off piece by piece. If the sale doesn't close by June 15, Fiat has the option of pulling out of the deal. In addition, production at Chrysler's manufacturing plants remains halted pending the closing of the sale.

The funds, which include the Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund, and the state's Major Moves Construction Fund, also are challenging the constitutionality of the Treasury Department's use of Troubled Asset Relief Program, or TARP, funds to supply Chrysler's bankruptcy protection financing. They say the Treasury did so without congressional authority.

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