"The funds appeal to this court to set aside the sale order, which undermines well-established principles of United States bankruptcy law and threatens to destabilize American credit markets by subverting the equitable principles of creditors' rights," Oppenheimer, one of the funds which claim a $96 million in secured debt were quoted as saying by Autonews.
The pensions funds argued Chrysler has set up an illegal "sub rosa" reorganization plan and violated the bankruptcy law by favoring junior creditors over secured ones. They said the manufacturer's plan to sell the assets to the new company while paying senior lenders only 29 cents to the dollar is not to be permitted under bankruptcy law.
Chrysler defends itself and says the funds got it all wrong. "In the end, the Fiat Sale is precisely that - a sale of assets for a price that far exceeds liquidation value, to a purchaser who wants to use the assets in a productive enterprise," Chrysler's lawyers said in court.
The UAW stands behind the American manufacturer and asked the court to dismiss the funds' claims. UAW lawyers said the funds had plenty of time in May to raise their objection and asked the court to recognize the sale as the only viable option for Chrysler.
If the sale is delayed Fiat may have the possibility to back down from the deal, although such a scenario is unlikely, especially because the Italians have already lost the battle for Opel.
"It's a real threat, if it (the appeals court) overturns the sale or finds it doesn't comply with bankruptcy code," Stuart Hirshfield, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo lawyer told Autonews.
Google News