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Wednesday, June 24, 2009
Ind. Gov't. - "Indiana Funds May Not Be Done with Chrysler"
"Indiana Treasurer Richard Mourdock is contemplating yet another legal challenge to the terms under which Chrysler sped through reorganization." So reports this story by David Welch in Business Week. Some quotes:
The Indiana pension funds that went all the way to the Supreme Court to try to stop the sale of Chrysler to Italy's Fiat Auto (FIA.MI) might be back again. Indiana Treasurer Richard Mourdock is mulling a legal motion to get the nation's highest court to rule whether the sale—which was finalized in bankruptcy court on June 10—was valid.The funds hope that the court will either overturn the sale or force the new Chrysler—which is owned by Fiat, the United Auto Workers, and the federal government—to pay secured creditors such as the Indiana pension plans some more money. Legal experts say it's a long shot, since a federal appeals court and Supreme Court Justice Ruth Bader Ginsberg already denied their efforts during the bankruptcy process.
Still, while it's hard to imagine the sale of Chrysler being overturned, Indiana's persistence shows what can happen now that the government is so deeply involved in Big Business. People like Mourdock cry foul and fight not only to recover more money, but to prove a point.
Mourdock, who has already spent $2 million of Indiana's money in a failed fight to recover more cash, admits that he is also motivated by principle. Mourdock argues the government rushed the sale of Chrysler and used its influence to manipulate bankruptcy proceedings. He is also personally opposed to government ownership of business. "John Wayne never needed a bailout," Mourdock says. "Is it about money? Is it about principle? Is it about the law? Yes. It's about more than Chrysler and Indiana. When we see the law has no meaning, it sets a bad precedent." * * *
If Mourdock decides to file the motion, the pension plans' hired counsel, aggressive Florida attorney Tom Lauria, will work pro bono. But the state's Solicitor General would also work on the case. That could be problematic since some of Mourdock's own constituents oppose his fight. Had Indiana stopped the sale and the carmaker was liquidated, some of the state's 7,000 Chrysler jobs would have been at risk. Those voters let him hear it. "They thought I was trying to attack their jobs," Mourdock says.
That's the tightrope Mourdock walks. While some constituents want him to drop the fight, he and Lauria may keep going. * * *
Lauria says Justice Ginsberg denied the review without ruling on the merits of the case. So he wants to get a review. He plans to push the issue on three points. His first point is that the UAW and federal government are two of the purchasers of Chrysler, but they have conflicts of interest because they were also creditors before the bankruptcy started. So the sale could be overturned on those grounds. His second complaint is that if the court believes they are still legitimate buyers, then he wants the court to revisit how much every creditor got paid.
And last, Lauria still wants the Supreme Court to rule on whether the Treasury Dept. could loan to carmakers using TARP without consent from Congress. TARP was originally set up for banks. If not, then the government couldn't own a piece of Chrysler and the whole deal would have to be reconstructed. * * *
Having lost every round so far, Mourdock has to decide whether he has a shot at winning and if his constituents want him to keep fighting.
Posted by Marcia Oddi on June 24, 2009 09:05 AM
Posted to Indiana Government