One small victory for an economy governed by law rather than arbitrary power.
A suit brought on behalf of Indiana pension funds claim that Chrysler deal orchestrated by Obama’s administraion illegally gave priority unsecured creditors, violating the law that gives priority to secured creditors. The Indiana brief argued:
Without a stay, Chrysler’s section 363 sale will be able to close Monday afternoon, and this case will be moot. Mootness would not only deprive the Indiana Pensioners of an opportunity for full recovery, but it would deprive the Court and the Nation of the opportunity for final determination of substantial and novel issues of law never before addressed by this Court or any other (save the decisions below). These issues include (i) whether the Sale attempted here—indisputably the fastest reorganization on record—constitutes an illegal sub rosa chapter 11 reorganization plan and violates the longstanding and fundamental rule that first-lien creditors have absolute priority in bankruptcy, and (ii) whether Treasury has the authority to direct the course of, and fund, this bankruptcy through the use of TARP funds under the EESA. The Court should stay the Sale Orders so that the Indiana Pensioners may, in good order, ask the Court to review whether the law permits such wholesale alteration of bankruptcy law, not to mention the American capital markets, by the Executive Branch of the U.S. Government acting beyond the color of Congressional authority.
From the Application For Immediate Stay Of Sale Orders Issued By The Bankruptcy Court filed by the State of Indiana. (Much of it is actually engrossing reading, especially the way the Feds bullied everyone to accept repeated violations of the bankruptcy law.)
Probably only a speed bump. But it is good to see someone speaking truth to power for a change. Obama’s high-handed and lawless takeover of the auto industry is a disgrace, directed at helping his political allies first, and all other consequences second.
It is good to see even a symbolic victory for the rule of law.
Bravo to the Indiana Solicitor General’s office. A small victory, even a temporary victory, is better than no victory at all — and in a case like this one, much better than never having fought.
UPDATE: This comment from the Althouse blog is a good summary of the situation.