Indiana officials hope to be heard by the U.S. Supreme Court as a part of their effort to reverse the court’s decision regarding payoffs following Chryslers chapter 11 bankruptcy. Stakeholders in Chrysler lost sizeable amounts due to the bankruptcy and subsequent court decision.
As a result of Chrysler’s bankruptcy filing in April, most of the company’s assets were sold off to pay debtors. Unfortunately, that meant a loss of investment money for three Indiana pension funds: The Indiana State Police Pension Trust, the Indiana State Teachers’ Retirement Fund and the Major Moves Construction Fund.
Richard Mourdock, Indiana State Treasurer says that unsecured creditors received support through the sale, while secured creditors were left with nothing. “I feel that the Constitution and the law have been violated by politicians, Republicans and Democrats alike,” Mourdock said. “This case looks to fix the mess created by Chrysler’s sale.”
The Indiana officials are attempting to block the deal involving the sale of Chrysler assets to Fiat but are awaiting word on whether or not their case will be heard by the Supreme Court. A similar appeal was rejected in June.
“Had we won the trial in June, there would have been no sale of Chrysler and we would have come out even,” Mourdock said. The investors are hoping that if the Court hears the case, they may recover at least part of their lost investment money.
Chief Deputy Treasurer and General Counsel for the Treasurer’s office, Jim Holden said, “The issue at stake is important either way. This case has the potential to change the fundamental notion of investment. Whatever the court comes back with will set a serious precedent for future law.”
Holden has said that a loophole was used by Chrysler creditors to find extra protection during the sale, and section 363 in the bankruptcy code allowed Chrysler to evade typical Chapter 11 bankruptcy reorganization.
The section enabled Chrysler to pay off unsecured creditors only; something Holden says is a “major misuse of 363.” He also argues that it “rigs the rules of the court.”
Four out of the nine judges of the Supreme Court must give permission, or petition of writ of certiorari, in order for the case to be heard. A decision will be made later this week.