Some of my fellow Hoosier bloggers (h/t Abdul and Josh Claybourn) have been following the Chrysler bankruptcy, particularly with respect to Indiana’s unexpectedly prominent role in the matter. Josh, in particular, has strong feelings on the issue, calling the proposed reorganization (presumably with some degree of hyperbole “The End of Capitalism as We Know It.”)
For those who haven’t been following the matter, Indiana Treasurer Richard Mourdock has been spearheading objections to the reorganization plan because of its affect on approximately $42 million nominally owed to the Indiana State Teachers Retirement Fund, the Indiana State Pension Trust and the Indiana Major Moves Construction Fund for investments these funds made in Chrysler. This represents about 0.6% of the $6.9 billion in first priority liens against Chrysler’s assets. However, despite Indiana’s very minor position among this class of creditors, it is the one raising the biggest stink and trying the hardest to derail the process. Chrysler smells politics. So do I. Under the proposed plan, Indiana will receive a return of about 29%.
This is an issue that journalists and Indiana politicians should probably be familiar with going forward. Maybe I’m wrong, but this has the smell of Mourdock and, potentially, Gov. Daniels trying to set themselves up politically as champions of the marketplace and defenders against Obama’s nefarious economic plots. If the bankruptcy court’s description (pdf) of the evidence presented bears any resemblance to what was actually presented, Indiana’s pursuit of these claims looks like a waste of taxpayer money – first there is no apparent alternative that would yield more money to the Indiana funds than the one being approved by the court; and second Indiana invested in Chrysler subject to an agreement that requires the Indiana funds to go along with the decisions of fellow investors that control a vastly greater share of the funds invested. Those creditors have consented to the deal with Fiat for a New Chrysler.
Much more after the jump.