The 2nd Circuit Court of Appeals has agreed to hear an appeal filed by the Indiana state pension system against the sale of Chrysler to Fiat in bankruptcy restructuring after a district court judge rejected the plaintiff’s attempt to prevent that sale from taking place. Automotive News reports:
A U.S. Court of Appeals agreed on Tuesday to hear a challenge to Chrysler LLC’s sale of most of its assets to a group led Fiat, in a move that could potentially delay the deal.
The federal circuit court granted a request by a group of Indiana pension funds that hold a small portion of Chrysler’s secured debt to “stay” the sale order to allow the circuit court to hear the expedited appeal.
A three-judge panel for the U.S. Court of Appeals for the Second Circuit will hear arguments in the appeal on Friday at 2 p.m. in New York, according to a court order on Tuesday.
The Indiana pension funds own a very small portion of the nearly $7 billion in secured debt that Chrysler sought to shed during bankruptcy proceedings. They are objecting to the plan filed in U.S. Bankruptcy Court because it favors, illegally the funds claim, junior creditors over senior creditors.
The bankruptcy judge, Arthur Gonzales, has already authorized the sale to take place by Friday. It seems unlikely that a circuit court would interfere with those proceedings, especially with so much at stake for so many others and the Indiana pension funds holding such a small claim relative to the total debt.