Chrysler Bankruptcy Sale Halted - Feds Acting Illegally

Indiana Treasurer Richard Mourdock said he was pleased the Court of Appeals agreed to hear state funds’ arguments that they and other secured creditors have been made secondary to government-preferred unsecured creditors “in contravention of longstanding bankruptcy law.”

Indiana’s appeal will raise several fundamental points of law including:
• The secured creditors, such as the Indiana funds, have been made secondary to unsecured creditors in
contravention of longstanding bankruptcy law. The proposed sale gives majority ownership of the
company to the government’s preferred unsecured creditors, while secured creditors receive only 29
cents on the dollar.
• The federal government has illegally used TARP funds to leverage this sale because the United States
(US) Congress intended TARP funds to solely be used to aid “financial institutions.” If the US Congress
wanted TARP funds to be used for the automobile industry, why did they specifically try to craft a
separate bailout bill that ultimately failed? Chrysler, LLC is not a “financial institution” and therefore
the government’s sale plan is illegal.
• The government’s plan constitutes an illegal “sub rosa” plan and not an arm’s length transaction.
Chrysler’s receipt of federal TARP funds has compromised its independence, and Chrysler has become
a puppet of the federal government. The proposed sale is an insider transaction that gives 20%
ownership to Fiat, an Italian company, which is not investing a single dollar in exchange for their
ownership interest.

News Release (PDF)