Posted on 06/07/2009 11:20:33 AM PDT by grundle
Pension funds opposed to Chrysler's sale to Fiat have asked the US Supreme Court to block the deal immediately.
Three Indiana state pension and construction funds filed papers at the court on Sunday calling for the sale to be halted so they can pursue an appeal.
It comes after a US appeals court approved Chrysler's sale to a group led by Fiat, a union-aligned trust and the US and Canadian governments.
Chrysler entered bankruptcy protection in April after falling vehicle sales.
US carmakers have suffered from a massive slump in sales during the recession.
The US government has backed its sale to the Fiat-led consortium, which would see it emerge from bankruptcy.
Fiat would control 20% of Chrysler, while 68% would be owned by a union trust, and the two governments would share 12%.
However, the pension funds, which hold about $42m (£26.3m) of Chrysler's $6.9bn in secured loans, are opposed to the sale.
They say it inverts usual bankruptcy practice and unlawfully rewards unsecured creditors, such as the union, ahead of secured lenders.
The emergency legal request from the Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund and the state's Major Moves Construction Fund goes before Justice Ruth Bader Ginsburg.
The judge can act on her own or refer the matter to the full court, when a vote from five of the nine Supreme Court members would be needed to put the Chrysler sale on hold.
If the sale is put on hold by the court, the Indiana funds would then pursue a full appeal.
If the deal is not completed by 15 June then Fiat, which is not paying anything for its 20% stake, has the option of pulling out.
(Excerpt) Read more at news.bbc.co.uk ...
But we all NEED to sacrifice for the Great Leap Forward...
Full text of stay request to USSC here:
http://online.wsj.com/public/resources/documents/indiana.pdf
Canada has had a government-owned railway (CN), airline (Air Canada), and oil company (Petro Canada). It “privatized” all of those. We still have a government-owned broadcaster (CBC), and various provincial governments own electric companies.
Now, it appears we have a government stake in auto companies. Even when “Crown Corporations” were all the rage, it never occurred to us that we should have a government-owned auto company. So long as we have a Conservative government, we'll try to divest ourselves of that ASAP.
Meanwhile, the U.S. government, having never owned railways, airlines, oil companies, nor utilities, is starting a portfolio with auto companies.
It's too weird for even speculative fiction.
Since a lot of US marketed Chrysler cars were built in Canada, this may be why Ottawa wanted to have a stake in this new thing. Ottawa would be wise to sell its shares off to individual Canadian investors as quick as it can. Assuming that the current court fight in the US doesn’t throw a permanent monkey wrench in the deal.
FOX said that the request goes to Ginsberg first as she is the Justice that oversees the Second Circuit Court.
The Second Circuit had issued a temporary stay that expires tomorrow.
She can deny it herself, grant a stay or refer it to the entire court.
I wish this were in the hands of Scalia, Thomas, Roberts or Alito. I believe they hold that the Obama power grab was unconstitutional. No so sanguine about our chances with Ginsu the Constitution Shredder.
And Barry’s shredding of the Constitution continues....
A single justice, not even the chief justice, gets the veto on whether the whole court can hear it? Thomas, Scalia, Roberts, and Alito cannot step forward on their own to pick up the ball (making the four votes to grant cert)?
And continuing your amazement, that single justice is Ruth Bader Ginsburg?
Thank you very much for the link.
I can’t understand why more bond holders are not joining the Indiana suit. There are a lot of retirement funds invested with them and have the same grounds.
At issue is whether or not lawfully enjoined contracts will be honored anymore and whether the federal government has the right to rewrite or negate legal contracts made between two parties.
I would say that is important.
That's not quite accurate. In the past, the US government has owned some of these entities (although I'm not sure about airlines -- other than CIA covers). In some cases, the "ownership" was a temporary bridge until the entity was either privatized or transferred/sold to a regional authority.
........having never owned railways, airlines, oil companies, nor utilities, ......
You are very wrong, very very wrong.
The American Government aquuired bankrupt rails. especially the Pennsylvania which morphed into the government owned Amtrack.
FDR established The Tennessee Valley Authority to generate hydroelectric power on the Tennessee River and tributaries. TVA is now one of the best operated nuclear power systems in the country. There is also a similar power company out your way, the Bonneville power authority.
Last wek Senator Alexander proposed legislation to remove the Auto companies from government ownership by issuing shares directly to the people, the taxpayers of record on April 15, 2009
Now, I have a hard enough time understanding traffic laws let alone bankruptcy law, but it seems to me that the heads of the Indiana funds speculated and lost badly. Why on earth were they buying Chrysler bonds in mid-2008 unless they expected the US government, invoking Too Big To Fail, to match their holdings penny for penny?
That’s ONLY a 32% loss - not as bad as a LOT of folks who bought closer to par.
praying Ruthie has the guts to do the right thing and refer to the full court.
“Why on earth were they buying Chrysler bonds in mid-2008 unless they expected the US government, invoking Too Big To Fail, to match their holdings penny for penny? “
in july 2008, the market had not crashed yet, killing discretionary spending such as on new cars. That was the nail that killed gm and Chry. NOW as opposed to down the line. If the companies had remained viable another year or two, there would have been substantial interests payments which would have reduced the effective cost basis of their purchase.
I do not see one saying they would have been made 100% whole even given following contract and bankruptcy law, but they certainly could expect more. Assets which should be going to making them whole are being diverted to other parties. Chrysler and GM are being LOOTED and viable assets resold to preferred third parties.
Secured means you get paid before unsecured creditors, which means even if you are not made whole, you know that the entire assets of the company will be in some manner returned to secured creditors by priority order. The government has essentially annulled this.
The judge can act on her own or refer the matter to the full court, when a vote from five of the nine Supreme Court members would be needed to put the Chrysler sale on hold.
Is that true? Can a judge "act on her own," without referring the issue to the full court?
“A single justice, not even the chief justice, gets the veto on whether the whole court can hear it?”
No - RBG con, by herself, grant or deny the stay - that is, block the sale.
Five justices have to vote to grant or deny a writ - that is, to hear the case or not.
However - and this is where it gets tricky - if RBG allows the sale, the case is “mooted” - there is no Chrysler to sue. Gone. Poof. Obama wins, the economy dies.
See #19.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.