According to today's Financial Times, three Indiana state pension funds have gone to court to fight the government's bankruptcy plan for Chrysler, stating:
"In a court filing on Wednesday, the Indiana funds accused the government of adopting a strategy of "the ends justify the means".
They also said the Treasury "has taken constructive possession of Chrysler and is requiring it to adopt a sale plan in bankruptcy that violates the most fundamental principles of creditor rights - that first-tier secured creditors have absolute priority"."
George Schultze of Schultze Asset Management stated that he felt their actions could galvanize other lenders to renew their challenge. The charge against the settlement is that it violates the most fundamental principles of creditor rights - that first-tier secured creditors have absolute priority. The funds have requested that the case be heard in district court instead of bankruptcy court.
There is only one outcome of this case that fits the guidelines in the US Constitution regarding property rights. It will be interesting to see if the case has that outcome.
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