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Appeals court upholds Chrysler bankruptcy assets sale

[JURIST] The US Court of Appeals for the Second Circuit [official website] Friday approved the sale of most of the assets of Chrysler Group [corporate website] to Italian automaker Fiat [corporate website; Chrysler/Fiat news release], but said the deal could not be completed until June 8 or until the Supreme Court declines to hear an appeal. The ruling upheld Monday's decision [opinion, PDF; JURIST report] by the US Bankruptcy Court for the Second District of New York [official website]. The deal is opposed by a group of Indiana pension funds that acquired $42.5 million in secured Chrysler debt last year. The funds argue that the agreement is unfairly biased toward unsecured creditors. Lawyers for the funds said they plan to appeal [NYT report].

Chrysler filed for bankruptcy protection [case materials] in April under Chapter 11 [text; Chrysler factsheet, PDF] of the US Bankruptcy Code after failing to negotiate the return of $6.9 billion in debt for $2 billion in cash with secured debt holders. The other members of Detroit's "Big Three" automakers have also faced financial troubles recently. General Motors [corporate website] filed [JURIST report] for bankruptcy [petition, PDF] on Monday. Ford Motor Company [corporate website] is seeking to regain lost market share [WSJ report] while its domestic rivals are involved in bankruptcy proceedings.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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