The US Court of Appeals for the Second Circuit will hear arguments in the case Friday afternoon in New York, according to the Indiana treasurer's office. Chrysler LLC had hoped to close the sale by the end of the week, pending regulatory approval.
"We are pleased the Court of Appeals has agreed to hear our arguments," Indiana Treasurer Richard Mourdock said in a statement. "As we have stated from the beginning, Indiana retirees and Indiana taxpayers have suffered losses because of unprecedented and illegal acts of the federal government."
Chrysler has maintained that the deal with Fiat Group SpA is its only hope of avoiding selling itself off piece by piece. If the sale doesn't close by June 15, Fiat has the option of pulling out of the deal.
But the funds, which include the Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund, and the state's Major Moves Construction Fund, claimed that the deal as structured, unfairly favours the interests of the company's unsecured stakeholders ahead of those of secured debtholders such as themselves.
They also challenged the constitutionality of the federal Treasury Department's use of the Troubled Asset Relief Program, or TARP funds, to supply Chrysler's bankruptcy protection financing.
Late Sunday, US Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler's case, issued a ruling approving the sale following three marathon days of testimony and arguments.
Terms of agreement
Gonzalez also ruled that the funds do not have standing to challenge the use of TARP money because they will receive their fair share of the US$2 billion set aside for secured debtholders, which is more than they would have received if Chrysler had liquidated.
Under the terms of the agreement, a United Auto Workers union retiree health care trust will receive a 55 per cent stake in the new company, while Fiat will get a 20 per cent stake that can increase to 35 per cent.
The remaining 10 percent of the company will be owned by the US and Canadian governments.
In the days leading up to Chrysler's bankruptcy filing, the automaker struck a deal with the majority of secured lenders to give them US$2 billion in cash, or 29 cents on the dollar, to erase the US$6.9 billion in debt.
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