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Friday, September 04, 2009
Ind. Gov't. - More on: "Indiana Funds May Not Be Done with Chrysler"
This June 24th ILB entry quoted a Business Week story that began: "Indiana Treasurer Richard Mourdock is contemplating yet another legal challenge to the terms under which Chrysler sped through reorganization." More from the story:
The Indiana pension funds that went all the way to the Supreme Court to try to stop the sale of Chrysler to Italy's Fiat Auto (FIA.MI) might be back again. Indiana Treasurer Richard Mourdock is mulling a legal motion to get the nation's highest court to rule whether the sale—which was finalized in bankruptcy court on June 10—was valid. * * *Today* the State of Indiana filed a petition for writ of certiorari before the Supreme Court of the United States.If Mourdock decides to file the motion, the pension plans' hired counsel, aggressive Florida attorney Tom Lauria, will work pro bono. But the state's Solicitor General would also work on the case.
Here is the "Question Presented":
After providing Chrysler interim financing in January 2009, the U.S. Treasury conditioned the additional financing needed for Chrysler’s survival on a restructuring that would provide billions to Chrysler’s unsecured trade and labor creditors but leave secured creditors with only partial payment. Treasury then directed Chrysler to reorganize in a transaction that would be approved on an emergency basis under section 363 of the Bankruptcy Code rather than through confirmation of a chapter 11 plan. After Chrysler filed for bankruptcy, the court imposed a 15-day deadline for final competing bids, which were required to adopt Treasury’s prescribed treatment of Chrysler’s unsecured creditors. As expected, no competing bidders came forward, and 31 days after Chrysler commenced its chapter 11 case, the court approved a transaction disposing of nearly all of Chrysler’s assets on Treasury’s terms. Chrysler’s first lien lenders received a liquidationbased recovery while unsecured creditors received over $20 billion of going-concern value in cash, new notes and stock from the reorganized business. Affirming, the Second Circuit declared that “[t]he ‘side door’ of § 363(b) may well ‘replace the main route of chapter 11 reorganization plans.’”_______The question presented is whether section 363 may freely be used as a “side door” to reorganize a debtor’s financial affairs without adherence to the creditor protections provided by the chapter 11 plan confirmation process.
* Note that this ILB entry was orginally posted yesterday, Sept. 3rd, but reposted today with a link and quotes to the petition.
Posted by Marcia Oddi on September 4, 2009 08:29 AM
Posted to Courts in general | Indiana Government