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NEW YORK - 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.
Incredibly high profile
The government-sponsored reorganization of the U.S. auto industry, including the Chrysler bankruptcy proceedings, "is a matter of incredibly high profile and importance," the funds said in their request to the high court. "The public is watching and needs to see that, particularly when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch."
U.S. Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler's case, approved the sale last Sunday, finding that the deal with Fiat was Chrysler's only alternative to liquidation.
The appeals court halted the sale on Tuesday, allowing the funds to appeal Gonzalez's decision.
The court ruled against the funds on Friday, but continued to delay the sale so that the funds could go to the Supreme Court.
Chrysler had hoped to close the sale by the end of this week.
Auburn Hills, Michigan-based Chrysler has maintained that the sale must be completed quickly to save the automaker from complete collapse. If the deal doesn't close by June 15, Fiat has the option of pulling out. Production at Chrysler's manufacturing plants remains halted pending the closing of the sale.
Dealers fight back
On Wednesday, a parade of Chrysler dealers slated to lose their franchises as part of the automaker’s restructuring testified in the automaker’s bankruptcy case, one choking back tears. Many touted their sales and service records and questioned how they were chosen for termination.
Arguments on Chrysler’s motion to cancel the dealerships’ franchise agreements are scheduled for Tuesday. It was unclear when Gonzalez will rule, or how this will affect Chrysler’s plans to sever ties with the dealerships effective Tuesday.
Chrysler claims that it needs to reduce its dealer base by 789 dealers, or about 25 percent, to a leaner network of about 2,400 dealers in order to emerge from Chapter 11 bankruptcy protection as a stronger company.
But the dealers argue that they don’t cost the automaker anything. They say that if Gonzalez approves Chrysler’s motion, hundreds of dealerships will be shuttered, and thousands of workers will lose their jobs.
A group representing about 300 of the dealers have filed an objection. They also earlier opposed Chrysler’s sale to Fiat, saying it was tied to the plan to eliminate the dealerships. Several attorneys for individual dealers also have filed objections.
Before Thursday’s testimony began, Gonzalez noted that Chrysler has a good case to terminate the dealer franchises.
Gonzalez said that under Chrysler’s plan, the rejected dealers will remain with “Old Chrysler,” a collection of assets that aren’t slated to be sold to the Fiat group. And since those leftover assets won’t be making vehicles, there would be little use for the dealers that would go with them, he said. (A Virginia Chrysler dealership owner speaks before some members of Congress on how the sale of Chrysler will impact him.)View Larger MapSources: MSNBC, Washington Post, Day Life, CNBC, CBS News, Flickr, Google Maps
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