Remember when Indiana Governor Mitch Daniels challenged President Obama’s “Cap and Trade” plan, saying it would hurt Indiana’s economy?
Three of Chrysler’s secured creditors are mounting a fresh attempt to thwart the carmaker’s Chapter 11 reorganisation on the grounds that it violates their legal rights and the US government’s authority under the Troubled asset relief programme.
The three – all Indiana state pension funds – are among a group of 46 creditors that had appeared to back away this month from efforts to derail the process under which a “new” Chrysler would emerge from bankruptcy protection by July 1. The new entity would be owned by a union healthcare trust, the US government and Italy’s Fiat.
Chrysler, with backing from the US Treasury, had offered its secured creditors just under 30 cents on the dollar to settle claims totalling $6.9bn. Four big banks, holding the bulk of the claims, accepted the offer following political pressure from Washington.
However, the Indiana State Teachers’ Retirement Fund said on Wednesday that it had a fiduciary responsibility to its members to continue the fight. The fund stands to lose $4.6m under the current settlement proposal and has teamed up with Richard Mourdock, Indiana state treasurer, to try to recover those losses.
The latest objections could galvanise other lenders to renew their challenge. “I fully support their motion and believe a number of lenders (including us) will ultimately join their group,” said George Schultze of Schultze Asset Management, one of the creditors that had abandoned an earlier legal fight.
In a court filing on Wednesday, the Indiana funds accused the government of adopting a strategy of “the ends justify the means”.
A US bankruptcy judge on Wednesday denied their attempt to halt proceedings in bankruptcy court, but a district court needs to rule on the funds’ request for the case to be heard in district court instead. The group also can oppose the final sale agreement, which under the current timeline must be approved by May 27.
Have I ever mentioned how much Hoosiers detest Illinois politicians? (Heh-heh.)