INDIANAPOLIS — Indiana State Treasurer Richard Mourdock hasn’t given up the fight to recoup millions of dollars lost to Indiana’s pension funds after the federal government forced automaker Chrysler into bankruptcy last year.

In a court filing that has received little public attention, attorneys for the Indiana state worker pension funds are asking a federal appeals court to vacate a bankruptcy court’s order that cleared the way for Chrysler to sell its assets to a purchasing group lead by Italian carmaker Fiat, the U.S. government and the automakers union.

Mourdock, who oversees the Indiana pension funds, says he’s not asking the court to undo the Chrysler sale. Instead the petition asks the court to allow the pension funds to challenge the way in which the sale proceeds were distributed, and, potentially, the terms of the carmaker’s liquidation plan scheduled for a hearing on April 20.

Attorneys for the carmaker and the United Auto Workers, which owns a 55 percent stake in the car company under the bankruptcy plan, contend that vacating the court order could unravel the sale and undermine the carmaker’s attempt to regain financial stability.

Mourdock and his staff say they’re obligated to continue a legal fight they launched last summer as a secured creditor in the bankruptcy case.

“We’re just trying to get our money back,” said Jim Holden, general counsel and chief deputy in Mourdock’s office.

The pension funds, which had invested nearly $46 million in Chrysler’s debt and cover more than 100,000 state workers, lost at an estimated $6 million in value as a result of the bankruptcy sale.

The aim of this latest legal maneuver mirrors what Mourdock’s office sought last June when it challenged the fast-tracked Chrysler asset sale that critics say was engineered by the federal government to the detriment of secured creditors, including the Indiana pension funds. Mourdock took the fight to the U.S. Supreme Court before being turned away.

In February, Indiana Solicitor General Tom Fisher and two attorneys from the prestigious private law firm of White & Case who represented the Indiana pension funds in their initial legal fight last summer, re-ignited the court fight with this new petition.

Mourdock’s critics, including leaders in the Indiana Democratic Party, have lambasted him for spending $2 million in legal fees from the pension funds on the private counsel. But White & Case have come back for this round for free; attorneys Glenn Kurz and Thomas Lauria are now working on a pro bono basis on the case, Holden said.

Last week, attorneys for Chrysler, the United Auto Workers, and the Presidential Task Force on the Auto Industry — which helped engineer the Chrysler asset sale — responded to the petition urging the appeals court not to wade back into what had been a contentious legal battle.

They argue that vacating the court order that approved the asset sale could undermine the carmaker’s attempts to regain its financial stability and put in peril the federal government’s $10 billion bailout of the carmaker. Vacating the court order could “re-open the door to litigation,” they contend.

Mourdock concedes he’s wading into politically unpopular waters. After Mourdock challenged the Chrysler asset sale all the way to the U.S. Supreme Court, Chrysler accused the Republican office holder of making demands that would have forced the carmaker out of business, resulting in a loss of more than 4,000 jobs and 9,000 retiree pensions in Indiana alone.

“The treasurer’s actions lead one to wonder if his motives are financial or political,” Chrysler’s statement said.

Mourdock, who owns and drives a Chrysler Dodge Ram pickup truck, denies that his actions then or now are politically motivated. “I have a fiduciary duty to pursue this,’’ Mourdock said.

He points to the U.S. Supreme Court’s brief ruling last December that turned down his request to revisit the Chrysler sale that had been approved by two lower courts.

The order didn’t address the merits of the challenge by the Indiana pension funds; instead it said they had failed to prove that the Supreme Court needed to intervene. The U.S. Supreme Court directed the Second Circuit Court of Appeals to dismiss the Indiana pension funds’ appeal of the sale order as moot, since the Chrysler asset sale had already closed.

Mourdock and the pension funds’ attorneys believe the Supreme Court gave them the opening to insist that the Chrysler sale order be vacated, and in doing so, challenge details of the bankruptcy plan, which elevated the rights of unsecured lenders above those of the secured lenders, including the Indiana pension funds.

The U.S. Supreme Court’s two-page order cited a case called United States v. Munsingwear that allows the court to vacate orders in appeals that become moot on their way up through the appeals process.

The petition seizes on that reference and argues that it requires the appeals court to vacate the order approving the Chrysler sale, which in turn might permit parties to revisit the details of how the funds from the sale of Chrysler have been distributed.

The Indiana pension funds and other secured creditors received just a fraction of their initial investment in Chrysler. 

Lawyers for the Indiana pension funds have contended that Chrysler used the guise of an asset sale under Section 363 of the federal Bankruptcy Code to subvert the procedural safeguards laid out under the Chapter 11 restructuring process. They contend the Chrysler sale elevated the claims of unsecured creditors, including Chrysler’s union retirees, to a higher status by giving them an equity stake in the new company that is now under Fiat’s control.

— Maureen Hayden is the statehouse bureau chief for CNHI Indiana newspapers. She can be reached at maureen.hayden@indianamediagroup.com.