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.
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 past week.
Auburn Hills, Mich.-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.
Chief Judge Dennis Jacobs of the New York-based appeals court asked Thomas Lauria, the lawyer representing the Indiana funds, why he believed his clients would be better off if the deal with Fiat went away and Chrysler was forced to liquidate.
"You can't wait for a better deal to come in from Studebaker," Jacobs said.
Lauria responded that the sale could be restructured to provide a better return for the secured debtholders.
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