NEW YORK -- A dissident group of Chrysler LLC lenders objected in bankruptcy court to the companys plans to sell itself to a new entity owned in part by Fiat S.p.A. and pay $33 billion to suppliers, dealers, workers, retirees and other constituents.
The senior lenders, consisting of investment funds and hedge funds, argued that the federal government exerted extreme pressure to coerce groups into an agreement that favors suppliers and other junior creditors.
President Barack Obamas actions are clearly inconsistent with the requirements of a good-faith sale, the lenders motion today said.
It is a sale that was orchestrated entirely by the (U.S.) Treasury and foisted upon Chrysler, said the group, whose members included Oppenheimer Funds and Stairway Capital as of last week.
The three motions filed today did not identify members of the group, and its lawyers said Friday that membership was shifting.
Under Treasurys proposal, Fiat would get a 20 percent stake in a new Chrysler that could grow to 35 percent if it meets certain goals. Fiats stake could increase to majority control under the plan if the new entity pays back all government loans.
Chrysler filed for bankruptcy protection last week after the dissident group refused to sign on to a Treasury plan to pay lenders $2.25 billion in cash in exchange for forgiveness of Chryslers $6.9 billion in debt.
Large banks such as JPMorgan Chase, Citigroup and Goldman Sachs that represent 70 percent of the debt had agreed to the plan.
The dissident group today also objected to Chrysler plans to pay $33 billion to various constituencies, citing the companys obligation to give secured lenders higher priority under bankruptcy law.
Among the plans objected to were $9.8 billion for employee and retiree health care benefits, $5 billion for pensions, $2.8 billion to suppliers, another $2.8 billion for warranty programs, and $980 million for extended service programs, its filing said.
Chrysler has argued that the $2 billion offered to lenders would be more than they would get if the company were to be liquidated rather than reorganized.
The dissident group said today they likely would receive more than this amount under a liquidation.
The automaker asked U.S. Bankruptcy Judge Arthur Gonzalez to set a hearing as soon as May 21 to approve a $2 billion sale of most of its assets out of bankruptcy that would clear the way for the partnership with Fiat, according to court filings.
The court has set a May 15 deadline for competing bids, according to Bloomberg News.
Reuters contributed to this report