*****BREAKING NEWS*****
The AP is reporting that “opponents of Chrysler’s sale to Fiat are asking the Supreme Court to block the deal.”
Opponents of Chrysler’s sale to Fiat are asking the Supreme Court to block the deal.
Three Indiana state pension and construction funds filed emergency papers at the high court early Sunday to put the sale on hold so they can pursue an appeal.
The federal appeals court in New York approved the sale Friday, but gave objectors until Monday afternoon to try to get the Supreme Court to intervene. Chrysler wants to sell the bulk of its assets to a group led by Italy’s Fiat as part of its plan to emerge from bankruptcy protection.
The emergency request goes first to Justice Ruth Bader Ginsburg, who handles such matters from New York. She can act on her own or refer it to the entire court.
The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund claim the deal unfairly favors the interests of the company’s unsecured stakeholders ahead of those of secured debtholders such as themselves.
The funds also challenged 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.
I can’t imagine the Obama administration winning this fight. They’re on the opposite side of well-established bankruptcy law. I’d have to believe that these pension funds could make a respectable case involving the Takings Clause, too. Certainly these pension funds can argue that they weren’t given fair market value, especially in comparison to what the unsecured creditors, aka the UAW, got.
If the Supreme Court rules against the Obama administration, it’s likely that the deal will have to be dramatically altered. For instance, if the Court finds that secured bondholders deserve a higher price for their bonds than do the UAW workers drawing their pensions, that part of the deal would surely be dramatically reconfigured.
Such a ruling would be a shot across the Obama administration’s bow. They wouldn’t dare try bullying these bondholders with the Supreme Court watching. Until now, the bondholders were bullied because it was just them vs. the leader of the free world. That dynamic might change into Pensioners and the Rule of Law vs. President Obama and the UAW.
That last fight isn’t a fight the Obama administration is likely to win.
Technorati Tags: SCOTUS, Bondholders, Pension Funds, Thomas Lauria, Rule Of Law, President Obama, UAW, TARP
Cross-posted at LetFreedomRingBlog
June 7th, 2009 at 7:41 pm
The government leaves the State of Indiana (and the other secured creditors who remain docily silent) no choice. They have teachers and citizens whose pensions and investments they are sworn to support. At last somebody has the spine to say, hold on Mr President, not so fast.