Chrysler’s sale of most of its assets to a group led by Fiat will move to the US Court of Appeals for the Second Circuit, bypassing the lower District Court, a bankruptcy court judge has ordered.
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The move could potentially delay the deal.
Edmunds.com CEO Jeremy Anwyl reacted to the news with the observation, “As George W. Bush learned from his ‘Mission Accomplished’ debacle, there’s always a danger in declaring victory prematurely.”
Bankruptcy court judge Arthur Gonzalez approved the assets sale earlier this week. Unless blocked on appeal, the sale becomes effective Friday, bringing a ‘New Chrysler’ out of bankruptcy.
However, 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 US Court of Appeals for the Second Circuit will hear arguments in the appeal on Friday at 2 pm in New York, according to a court order issued on Tuesday.
The Indiana pension funds have objected to the sale saying it violates traditional bankruptcy laws about the priority of repayment by favouring more junior creditors over senior secured creditors.
“As we have stated from the beginning, Indiana retirees and Indiana taxpayers have suffered losses because of unprecedented and illegal acts of the federal government,” Indiana State Treasurer Richard Murdoch said in a statement on Wednesday.
Chrysler has also said it will resume production at most of its assembly plants by the last week of June, less than 60 days after it filed for Chapter 11 bankruptcy protection.
