Indiana schemes appeal Chrysler sale

The sale was opposed by the Indiana State Teachers' Retirement Fund, the Indiana State Police Pension Trust and infrastructure fund Major Moves Construction Fund- which are all represented by the Indiana Treasurer - on the ground it discriminated them as creditors towards the car manufacturer.

Indiana Treasurer chief deputy and general counsel Jim Holden told Global Pensions the decision leaves them "disappointed, but not surprised."

He said: "Our attorneys have already filed a notice of appeal and we are going to ask for the hearing to take place this week."

He also dismissed the critiques by Chrysler and the US government the legal actions were slowing down the timetable of the sale. He said: "The government has indicated that they want to conclude the sale by June 15 and surely we can at least have an appeal at the District Court before then."

The Indiana pension funds are holders of Chrysler secured debt. The Teachers' pension fund holds US$32.4m in Chrysler debt and the Police pension fund holds $1.3m.

The motion filed by the Indiana pension funds alleged Chrysler bankruptcy was used "to extinguish the property rights of the pension funds as secured lenders, violating the most fundamental tenets of creditor rights in disregard of widely recognized bankruptcy jurisprudence."

It also alleged the proposed restructuring of stakeholders' rights sought "to make payments of billions of dollars to unsecured creditors, while paying the secured creditors only $0.29 on the dollar."

In a statement published at the time the motions opposing the sale were filed, Indiana treasurer Richard Mourdock said: "As fiduciaries, we can't allow our retired police officers and teachers to be ripped off by the federal government.

"The Indiana state funds suffered losses when the Obama administration overturned more than 100 years of established law by redefining 'secured creditors' to mean something less."