(UNDATED) - Indiana's lawsuit challenging the constitutionality of automakers using Troubled Asset Relief Program money is headed to a federal appeals court.
The suit puts Chrysler's sale to an Italian automaker on hold.
State Treasurer Richard Mourdock says bondholders with the Indiana State Police Pension Fund, The Major Moves Construction Fund, and The Indiana Teacher's Retirement Fund have lost their secured status as bondholders.
Mourdock says it is illegal to use the money for automakers because that is not the intended use for the funds.
Indiana's argument is TARP money is for banks, insurance firms, and credit unions.
The US Court of Appeals for the second circuit in New York has halted Chrysler's sale to Fiat and has scheduled the case for a hearing today at 2 p.m.
The court will hear arguments from Fiat can bailout of the sale if it does not close by June 15.
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