The Work

June 9, 2009 4:15 PM

Report: White & Case Billed Indiana Pension Funds $2 Million

Posted by Zach Lowe

The Indiana pension funds that represent something of a Last Man Standing in the Chrysler bankruptcy are carving out a piece of historical lore as self-proclaimed defenders of traditional bankruptcy rules. 

That fight, which reached the U.S. Supreme Court Monday, has not come cheap. The pension funds have paid White & Case $2 million so far in legal fees for the firm's work protesting the deal, arranged by the Obama administration, to sell Chrysler's best assets to a group headed by Fiat, according to the New York Times.

The pension funds are the last of a once-large group of holdout secured lenders who claimed the deal subverted decades of bankruptcy law by giving unsecured creditors--including the United Auto Workers--a stake in the new company. Secured lenders, meanwhile, have been asked to accept 29 cents for every dollar of Chrysler debt they own.

The funds, which represent teachers and police officers, hold about $42.5 million in Chrysler debt they purchased for 43 cents on the dollar last year. Richard Mourdock, Indiana's state treasurer, told the NYT his job is simple: defend the interest of his retirees. 

Mourdock is upset about the deal the UAW is getting and the possibility that the Obama administration used federal bailout money as leverage to get banks who received it (including JPMorgan Chase, Chrysler's agent lender) to accept the 29-cents-on-the-dollar deal. (Simpson Thacher & Bartlett is advising JPMorgan in Chrysler matters.)

Mourdock's money quote about the big banks, courtesy of the NYT: "Someone whispered in their ears, 'Hey, guess what boys? You're too big to fail.' Our Hoosier retirees aren't."

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