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View Full Version : Legal Retirement Fund takes Administration on to defend Creditors rights


HonestChieffan
05-20-2009, 05:28 PM
Uh oh, looks like a teachers retirement fund is the first to raise the flag again demanding to be treated legally! They will loose over 4 million from the Obama strong arm approach of denying secured creditors the first priority in a bankruptcy! Sounds like others are joining back in.

This begs the question, since Obama is wanting to take over 4 million from the Indiana State Teachers Retirement Fund, why does he hate teachers?




Funds move to halt Chrysler restructuring
By Bernard Simon in Toronto and Nicole Bullock in New York

Published: May 20 2009 20:39 | Last updated: May 20 2009 23:11

Three of Chrysler’s secured creditors are mounting a fresh attempt to thwart the carmaker’s Chapter 11 reorganisation on the grounds that it violates their legal rights and the US government’s authority under the Troubled asset relief programme.

The three – all Indiana state pension funds – are among a group of 46 creditors that had appeared to back away this month from efforts to derail the process under which a “new” Chrysler would emerge from bankruptcy protection by July 1. The new entity would be owned by a union healthcare trust, the US government and Italy’s Fiat.

Chrysler, with backing from the US Treasury, had offered its secured creditors just under 30 cents on the dollar to settle claims totalling $6.9bn. Four big banks, holding the bulk of the claims, accepted the offer following political pressure from Washington.

However, the Indiana State Teachers’ Retirement Fund said on Wednesday that it had a fiduciary responsibility to its members to continue the fight. The fund stands to lose $4.6m under the current settlement proposal and has teamed up with Richard Mourdock, Indiana state treasurer, to try to recover those losses.

The latest objections could galvanise other lenders to renew their challenge. “I fully support their motion and believe a number of lenders (including us) will ultimately join their group,” said George Schultze of Schultze Asset Management, one of the creditors that had abandoned an earlier legal fight.

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”.

The Indiana funds say the current plan will strip their collateral into the new company, benefiting more junior creditors. The funds also allege that Tarp funds were meant to be funnelled only to financial institutions.

“Whatever powers the Treasury department may have under Tarp,” the funds said, “it does not have the power to control the entire restructuring of a company to the detriment of the company’s secured creditors and for the benefit of other interest groups so that certain broader policy and political objectives may be achieved.”

A US bankruptcy judge on Wednesday denied their attempt to halt proceedings in bankruptcy court, but a district court needs to rule on the funds’ request for the case to be heard in district court instead.

The group also can oppose the final sale agreement, which under the current timeline must be approved by May 27.
Copyright The Financial Times Limited 2009