NEW YORK — According to various news reports, the Second Circuit Court of Appeals in New York on Friday will hear an appeal to the case, submitted by three Indiana pension funds that oppose the sale. The three funds claim the deal violated the rights of about 45 secured lenders participating in the pension, when the interests of taxpayers and the UAW’s retiree health care trust were given priority over them. The group also believes Chrysler should have been liquidated in order to pay off its secured lenders.
Reports indicate the Indiana funds held $6.9 billion in secured loans to Chrysler. The U.S. Treasury offered all of Chrysler’s secured lenders $2 billion in cash, or 29 cents on the dollar, to forgive their debt. All but the three pension funds took the offer.
The case went directly to the Appeals Court rather than being heard in a district court. If the case is not wrapped up quickly, the deal could potentially fall through. Fiat has legal right to terminate the merger agreement before June 15.
