REPORT: Chrysler's sale to Fiat put on hold temporarily to hear debtor objections
The state of Indiana has a big problem with Chrysler's bankruptcy proceedings. Indiana state treasurer Richard Mourdock explained that "Indiana retirees and Indiana taxpayers have suffered losses because of unprecedented and illegal acts of the federal government." The home of the Indianapolis 500 has $42 million worth of retirement funds invested in the Pentastar; less than 1% of the $6.9 billion in secured debt owed by Chrysler. Indiana's appeal of the Fiat sale officially puts any deal with the Italian automaker on hold until a resolution has been made.
Veteran bankruptcy judge Arthur Gonzalez couldn't disagree with Mr. Mourdock more, saying ""the Court finds that all relevant standards have been established to grant the relief requested." By "relief," Judge Gonzalez is likely talking about Fiat and its ability to take ownership of Chrysler.
Though $42 million doesn't buy a lot these days, the state has the right to fight the bankruptcy. Whether the midwestern state wins its case is another matter all together.The New York Court of Appeals hearing of the state of Indiana's objection to the Chrysler bankruptcy hearing is widely viewed as little more than a formality. Chrysler's bankruptcy has gone very smoothly thus far, and with the backing of plenty of rock-solid legal types in the White House, it is now looking more and more likely that Chrysler will indeed exit bankruptcy in around 60 days.
[Source: The Detroit Bureau]
Reader Comments (Page 1 of 2)
Throwback 2:39PM (6/04/2009)
Suppose the pension funds win, Fiat pulls out of the deal, and Chrysler goes to Chapter 7. Will the Pension funds come out better in that scenario?
Reply
brn 4:52PM (6/04/2009)
If unsecured creditors get preferential treatment to secured creditors, there is something VERY wrong going on. Two wrongs do not make a right.
Throwback 7:39PM (6/04/2009)
I don't disagree, I just wonder what would the fall out be if Chrysler ends up liquidating and the pension plans walk away with 2cents on the dollar.
Tool 8:42PM (6/04/2009)
$42 million is nothing. It's called putting your money at risk. The money manager should have known that is was a hugely risky bet, especially since it was automotive and it was the sickest, most braindead of all the D3, Chrysler. Sound like a CYA move to me.
BigWill 9:27PM (6/04/2009)
Putting your money at risk? They bought SECURED debt. Since you think they're stupid for not taking the risk into account, how well do you think the economy would cope if interest rates reflected risk - like, say, 15-20% interest on mortgages and 30% interest on car loans.
Yeah, that'd work.
Frank 2:40PM (6/04/2009)
So much for the "Chrysler won't survive bankruptcy" naysayers. Once this is done the hard work of turning around this company begins. That is still in doubt but I wish them (and FIAT) good luck. Hopefully GM's will go as smoothly.
Reply
mkM3 2:51PM (6/04/2009)
Wow, talk about pissing people off. This guys is likely to have a lynch mob of angry laid-off Chysler workers from across the country at his office door if he somehow succeeds in killing the Fiat deal (which I doubt he will).
Reply
Snark 6:49PM (6/04/2009)
Not gonna happen. Bankruptcy courts generally say, "Well, that's very sad, but go pound sand," when stuff like this crops up.
John 2:53PM (6/04/2009)
SHOCK - a Republican granstanding? Who woulda thunk it?
Reply
John 3:12PM (6/04/2009)
Take your political tripe somewhere else.
Sanders 3:28PM (6/04/2009)
Ah, John, I think you're posting to yourself. How are the meds going?
ehisforadam 2:55PM (6/04/2009)
Would Indiana rather loose $42million or the jobs of Chrysler employees there?
Reply
ij70 6:28PM (6/04/2009)
ChryCo failed one contract, what is to stop it from failing another contract?
People say that business is about greed. However, if you dig down to the very bottom, business is about trust.
Also, I am not sure how much ChryCo build in Indiana. I am in Indiana and most factories around me are GM and GM related.
Yikes 9:26AM (6/05/2009)
All Chrysler factories are shuttered anyway.
I say sell off the building and equipment and give the creditors they money. Put a nice memorial plaque where Chrysler headquarters once was.
Gardiner Westbound 3:00PM (6/04/2009)
Obama's union bailout does not respect bankruptcy laws. It's time somebody called him on it.
Reply
Judy Zik 12:24AM (6/05/2009)
Your right it doesn't. Mostly because Chrysler had 0% chance of surviving otherwise. The government had to come in and save the day. The only problem with government help is it is like a bunch of mice asking an elephant for help. Somebody is going to get stepped on.
Yikes 9:28AM (6/05/2009)
Clearly the answer is for the government to kick that mafia organization to the curb.
Reopen Chrysler without all those corrupt worthless mafia people and they should be able to be competitive again.
Who 'Dis? Who 'Dat? 3:05PM (6/04/2009)
"Though $42 million doesn't buy a lot these days . . . " Where have you folks been shopping?"
But seriously, both Throwback and Frank pretty much summed up the situation in clear anc concise terms. Unfortunately, many people will feel the pinch of these actions for many years to come. And the good folks in Indiana are no exception. These are rather unique times which require unique solutions. Who would have thought that two of America's manufacturing stalwalts would find themselves in his situation.
Thowback said it best suggesting that if Chrysler goes into Chapter 7 bankruptcy then everybody loses everything. And as Frank says now comes the hard part.
Reply
Steven Levin 3:04PM (6/04/2009)
What they are asking is: why should their pension fund take much bigger loss than the UAW? Especially when their moneys are secured and the UAW's aren't?
While UAW President Obama likes to paint the creditors as "greedy opportunistic speculators" the reality is that there are literally billions of (non UAW) pension fund dollars that were invested by various smaller retirement funds that are getting shafted so the UAW can come out of the deal significantly intact.
Reply
Rob 3:49PM (6/04/2009)
This is crony capitalism at its finest. The UAW ends up owning most of the company, while creditors and bond holders get screwed.