Three Indiana funds,Â the Indiana State Teachers Retirement Fund, the Indiana State Pension Trust and the Indiana Major Moves Construction Fund, sought to delay the Chrysler bankruptcy, but their motion was denied by the bankruptcy judge.
At a hearing Wednesday, U.S. Bankruptcy Judge Arthur Gonzalez in Manhattan denied a motion by a group of Indiana pension funds to hold off on the sale hearing while they have more time to review documents and other discovery in the matter.
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The pension funds . . . are seeking to challenge the constitutionality of the sale because of the U.S. government’s heavy involvement in the deal.
The funds, which own about $42.5 million of Chrysler’s $6.9 billion in secured debt, have claimed the deal was unconstitutional because the United Auto Workers union, an unsecured creditor, would see a better recovery. The secured creditors are expected to receive about 29% of their claims under the plan.
So, if my math is correct, these funds’ $42.5 million will turn into $12.3 million, a loss of about $30 million. State Treasurer Richard Mourdock “vows” an appeal. Chrysler calls Mourdocks actions “political grandstanding.” Indiana is the only investor among 46 of them who is challenging the repayment plan for bondholders. Major banks including Citigroup and J.P. Morgan Chase have accepted the plan.