A group of Indiana pension funds opposed to Chrysler's sale to Fiat has filed an emergency appeal with the U.S. Supreme Court to immediately halt the sale. The emergency stay request was filed shortly before midnight on June 6 and came after the 2nd U.S. Circuit Court of Appeals in New York approved the acquisition of most of Chrysler's assets by a group led by Italy's Fiat.
The stay request asks for the extension of a temporary hold on the sale put in place by the appeals court until 4:00 pm on June 8 or when the high court decides whether to intervene.
"Absent a stay, the court will be deprived of the opportunity to decide critical, nationally significant legal issues relating to management of the economy by the United States government," the pension funds said in their application. They argued that the sale is unconstitutional because it puts the rights of junior creditors ahead of the rights of senior lenders.
The three state pension and construction funds also said the U.S. Treasury Department has overstepped authority granted by Congress under the Troubled Asset Relief Program (TARP), a $700 billion bailout intended for the financial industry, by financing Chrysler's restructuring.
"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," lawyers for the funds and the Indiana attorney general wrote in their filing.
"The issues presented by this case are of immediate -- and enduring -- national significance."
On June 5, a three-judge panel from Second Circuit Court of Appeals dismissed the challenge from the state pension funds and upheld a decision by a New York bankruptcy judge approving the U.S. government-backed plan to create a new entity to buy the assets of the troubled number three American automaker.
Under the planned tie-up with Fiat, the new firm would be majority owned by the United Auto Workers (UAW) union, with small stakes by the U.S. and Canadian governments, which would contribute $10.5 billion to the venture.
Emergency stays are rarely granted by the Supreme Court. But if the request were approved, the Chrysler deal with Fiat could be delayed for weeks or months while the issue is pending at the high court because a stay extension would buy time for the pensions funds to lodge a formal appeal at the high court. Fiat can pull out of the deal if it does not go through by June 15.
Justice Ruth Bader Ginsburg would handle the filing, as emergency motions from the appeals court in New York fall under her authority. She could rule herself or refer the motion to the entire court. Ginsburg can also reject the appeal outright or request other parties involved in the case file briefs.
Copyright Agence France-Presse, 2009