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 Money.com 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.”

GM and Chrysler LLC shades off dealers for the sake of survival

On June 3, 2009, at a Senate Commerce Committee hearing executives of the GM and Chrysler LLC said that the elimination of their dealers is a critical step for their survival. The two major American automakers went bankrupt and declared to eliminate more than 2,300 dealerships. This means an estimated 100,000 people will lose their jobs which forced the government to look into the matter.

In his testimony, Frederick A. Henderson, interim CEO of GM, said that his company had no choice but to sacrifice for the sake of a “stronger and more viable GM.” In his testimony, Jim Press, Chrysler President, said that in order for a successful merger with Fiat SpA, the company required a “quick turnaround of its dealer network.”

However, Senator John Rockfeller, chairman of the panel, was not satisfied with their explanation. He said that the companies, who received government bailout money and not helping their local dealers and customers, were doing wrong.

This move by the two auto companies shows failure of the Obama administration to protect US jobs. However, the government has to admit that only giving away money would not change the financial condition of the companies. I think, along with stimulus packages, the present American government should work on reforming their overall business and corporate sector to survive in the future.

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Reuters