WASHINGTON, June 7 – Indiana pension funds asked the US Supreme Court on Sunday to immediately delay the sale of bankrupt automaker Chrysler to a group led by Italian carmaker Fiat while they challenge the deal.
The request, which moves the legal battle to the highest court in the United States, was filed after a US appeals court in New York approved Chrysler’s sale to a group led by Fiat, a union-aligned trust and the U.S. and Canadian governments.
The Chrysler ruling could set a precedent for the case of General Motors, which is using a similar quick sale strategy in its bankruptcy in New York.
The appeals court late on Friday stayed the closing of the sale until Monday afternoon, giving the pension funds time over the weekend to ask the Supreme Court to block the sale while they appeal.
The pension funds, which hold about $42m of Chrysler’s $6.9bn in secured loans, have argued the sale unlawfully rewarded unsecured creditors such as the union ahead of secured lenders and that Chrysler was pursuing an illegal reorganization plan through a sham sale.
”The need for the court to review the profound issues presented by Chrysler’s novel bankruptcy sale far outweighs the cost of delaying” a sale, lawyers for the pension funds and the Indiana attorney general said in seeking an immediate stay.
The three state pension and construction funds also argued the US government, which kept Chrysler afloat with emergency loans before the automaker’s bankruptcy and financed its Chapter 11 filing, overstepped its authority by using bailout funds Congress intended for banks.
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