Government officials asked the U.S. Supreme Court on Monday to allow the sale of most of Chrysler's assets to a group led by Italy's Fiat without further delay.
The Office of the Solicitor General filed papers opposing a request from three Indiana state pension and construction funds to halt the deal pending a review by the high court, saying that such stays are only granted under extraordinary circumstances.
An appeals court in New York approved the sale Friday, but gave objectors until 4 p.m. EDT Monday to try to get the Supreme Court to intervene. The Indiana funds filed emergency papers with the Supreme Court on Sunday, joined by lawyers representing consumer groups and individuals with product-related lawsuits.
The emergency requests went to Justice Ruth Bader Ginsburg, who handles such matters from New York. She can act on her own or refer it to the entire court.
Chrysler claims the deal with Fiat is a critical part of its plan to emerge from Chapter 11 bankruptcy protection. Fiat has the option of pulling out of the agreement if the sale does not close by June 15, which could leave Chrysler with no other option but to liquidate.
But the Indiana funds, which hold a small part of Chrysler's secured debt, claim the sale as structured unfairly favors Chrysler's unsecured stakeholders ahead of secured debtholders like the funds.
As part of Chrysler's restructuring plan, the company's secured debtholders will receive $2 billion, or about 29 cents on the dollar, for their combined $6.9 billion in debt. The Indiana funds bought their $42.5 million in debt in July 2008 for 43 cents on the dollar.
The funds also are challenging the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program to supply Chrysler's bankruptcy protection financing. They say the government did so without congressional authority.
The consumer groups and individuals with product-related lawsuits are contesting a condition of the Chrysler sale agreement that would release the company from product liability claims related to vehicles it sold before the "New Chrysler" partnered with Fiat is created.
Individuals with claims against "Old Chrysler" would have to seek compensation from the parts of the company not being sold to Fiat. But those assets have limited value and it's doubtful that there will be available to pay consumer claims.
The appeals come as Congress intensifies its scrutiny of the Obama administration's government-led restructuring of Chrysler and General Motors Corp. The Senate Banking Committee said it planned to call Ron Bloom, a senior adviser to the auto task force, and Edward Montgomery, who serves as the Obama administration's director of recovery for auto communities and workers, to a hearing Wednesday.
Sen. Christopher Dodd, D-Conn., the committee's chairman, planned to review the use of TARP funds to help the auto companies and look at whether taxpayers will receive a return on their investment.
GM and Chrysler executives faced questions last week from Congress over the elimination of hundreds of dealerships as part of the companies' reorganizations.
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Associated Press Writer Ken Thomas in Washington contributed to this report.