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Court Halts Chrysler Bankruptcy

The 2nd Circuit Court appeals in New York has issued a stay in the Chrysler bankruptcy proceedings.   The Court has agreed to hear arguments on behalf of Indiana Sate Police, Teacher’s Retirement Fund and the Major Moves Construction Fund.  

The hearing is set for Friday at noon.   State Treasurer Richard Mourdock says the state’s appeal will make the following points.

  • The secured creditors, such as the Indiana funds, have been made secondary to unsecured creditors in contravention of longstanding bankruptcy law. The proposed sale gives majority ownership of the company to the government’s preferred unsecured creditors, while secured creditors receive only 29 cents on the dollar.
  • The federal government has illegally used TARP funds to leverage this sale because the United States (US) Congress intended TARP funds to solely be used to aid “financial institutions.” If the US Congress wanted TARP funds to be used for the automobile industry, why did they specifically try to craft a separate bailout bill that ultimately failed? Chrysler, LLC is not a “financial institution” and therefore the government’s sale plan is illegal.
  •  The government’s plan constitutes an illegal “sub rosa” plan and not an arm’s length transaction.  Chrysler’s receipt of federal TARP funds has compromised its independence, and Chrysler has become a puppet of the federal government. The proposed sale is an insider transaction that gives 20% ownership to Fiat, an Italian company, which is not investing a single dollar in exchange for their ownership interest.

 

 

Posted: 06|3|09 at 7:02 am by Abdul Hakim-Shabazz
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  • Daw-g

    :-)

  • patriot paul

    This case has merit. We should never have been kicked to the back of the bus.

  • pascal

    Which Indiana Congressmen want to take credit for voting to steal the retirement funds of Hoosiers? And, what are they doing about this theft? Hoosier values count, I think, and the whole rest of the country can sit back and let their funds be stolen but we can take some pride that we don’t like it and we don’t don’t like congressional enablers of THEFT.

  • Jack

    Landmark case if change from secured investors such as bonds go to the bottom of the pile. Could have major impact on investment philosphies.

  • Think Again

    This is Judge Santomayor’s circuit. I wonder if she was on the panel?

  • Taxpayer 834512

    “Could have”? I’ve moved a large chunk of formerly stock money to bonds & money market. Think other individuals, institutional investors, and I aren’t contemplating where to invest bond money?
    .
    Saying this as nicely, non-partisanly, non-acrimoniously as possible: I believe there are problems with the Chrysler bankruptcy solution.

  • Jon G

    Come on. Who’s going to win this one……gee could it be…..?

  • http://www.hoosiersforfairtaxation.com Melyssa

    Lesson learned: Don’t be a puppet of the government.

  • Dave

    What of the state’s unconstitutional, mishandling of property taxes, resulting in devaluation & shareholder losses for Indiana Banks? And, ain’t there a lobby out there, with free market sensibilities, capable of foreseeing the devaluation which results from excessive, confiscatory property taxation? Kudos to Richard Moudock for his free market mindedness.

  • Pingback: Masson’s Blog - A Citizen’s Guide to Indiana » Indiana and the Chrysler Bankruptcy

  • http://blog.masson.us Doug

    This isn’t a case where secured creditors are getting kicked to the back of the bus. There are two viable options on the table – 1) Liquidation; or 2) The Fiat Deal. The Fiat deal results in more money to the first priority lenders than the liquidation option. That’s why creditors representing 96% of the dollars controlled by the first priority secured lenders aren’t objecting to the plan.

  • Dave

    Wow! Wow! Wow! As a guest on this morning’s Abdul Show, State Treasurer Mourdock cited his Constitutional OATHS (US, state) as duty binding imperatives to which he is bound, in protecting the rights of Hoosiers. That’s leadership! This key ingredient, critical to the care & maintenance of our republic, is exactly what’s missing from our legislature; a cake that fails to rise, session after session. Imagine the outcome of the property tax mess (OK, crisis, “perfect storm,” etc.), if our elected officials actually stood up, with that same Constitutional fortitude; we would have citizen centered policy, more familiar to the people than special interests. Keep it up Mr. Mourdock, what you’re doing is right & the Constitution is our / your guide.

  • Nick

    The Inside Story:

    Cerberus, the Feds and Indiana

    http://blogs.indystar.com/commonsense/2009/06/cerberus_and_th.html

  • pascal

    Mr. Mourdock was also on Garrison’s show. I like the idea of elected officials looking out for the retirement funds of teachers and policemen. But, I do wonder why anyone would have ever bought bonds in such a risky venture. I fault Sen. Lugar for bailing Chrysler out the first time. It would have been better for everyone to establish that no one was too large to fail. Ideas have consequences and so should failure…NB should apply to government schools who now have decades of absolute failure on their records but are to large to fail?

  • Dobie

    According to an article on cnn.com, the Obama administration is asking the Supreme Court to decline to hear the arguement to halt the sale of Chrysler assets using the arguement that the needs of the economy as a whole outweigh the needs of the few deal detractors. Since when do what rights you have under the law depend upon who needs something more? If only one person refuses to waive their rights and they are legally entitled to more compensation – then the deal needs to be stopped. The fact that our government would argue otherwise is just plain frightening.