Sunday, June 7, 2009

Chrysler LLC sales: Whose side Richard Mourdock is on?

Despite being refused by appeal courts two times, Indiana Pension Funds, headed by Richard Mourdock, is pressing on for stay in the Chrysler LLC sales. On June 5, 2009, US appeals court gave Chrysler the green signal to continue its sales to Italian carmaker Fiat S.p.A. The newly formed company known as the Chrysler Group will be jointly owned by the U.S. government, an autoworker's union retiree fund and the Italian Automaker Fiat. The deal will be finalized within June 8, 2009, if the Supreme Court does not intervene.

On June 6, 2009, the group of Indian pension funds filed another emergency appeal with the Supreme Court Justice Ruth Bader Ginsburg. CNN reports:

She could act on her own or refer the case to the remainder of the court. A stay from the full court would require a majority of the court's nine members.

"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 funds said in their stay application.

On May 31, 2009, Indiana State Treasurer Richard Mourdock, on behalf of three pension funds (Indian teachers, state police, and “Major Moves” pension fund), appealed against the ruling of the Federal Bankruptcy court that allowed Chrysler LLC to sell the companies top assets. The three pension funds bought shares worth $42 million which is less than 1% of the total debt of Chrysler LLC. Mourdock’s side of argument is that, as secured creditors, the funds deserves better against unsecured creditors like the Fiat. He said that for the first time in the history of USA unsecured creditors are getting more value in bankruptcy than secured creditors. The funds paid $ 0.43 per share and getting $0.29 cents which results into a $6 million loss for the state of Indiana and this is not fair. If the sales of Chrysler LLC is not finished by 4 p.m. within June 8, 2009 then the deal will be expired.

From my point of view, this whole legal fuss forwarded by Richard Mourdock seems to me like an effort to upgrade his public image so that he could run for governor. At least, the creditors are getting something out of this restructuring. If the sales is not finished, they would not get anything. Mr. Mourdock must remember that “Something is better than Nothing.”

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