Indiana taxpayers pay for Treasurer’s crusade

An article by Zach Lowe in the AmLaw Daily reports that the Indiana pension funds have paid White & Case $2 million in legal fees. The funds, led by state treasurer Mourdock, were supposedly protesting a “bad deal,” which provided lenders with 29 cents on the dollar (the funds themselves paid about 43 cents on the dollar for the risky loans). While liquidation would, by any credible estimate, have resulted in much lower returns, Mourdock claimed that the UAW was put ahead of banks in repayment, because they were given 55% of a company worth, by Daimler’s estimate, nothing (and, based on the purchase price, just over $1 billion) – in return for around $10 billion in obligations.

Mourdock’s stand, which the Appeals Court found to have little, if any, merit, is estimated to have cost Chrysler over half a billion dollars, as well as the $2 million in legal fees charged to the pension funds, which had already lost money on the risky debt. However, the political points appear to have been scored, as many now believe the UAW was indeed put ahead of secured lenders, despite the numbers and precedents set in past bankruptcies.