A New York bankruptcy court will hear arguments on Tuesday by a group of Chrysler lenders seeking to block the restructuring of the ailing Detroit carmaker on the grounds that the process is “patently illegal”.

The dissident group, calling themselves the “non-Tarp lenders”, drew President Barack Obama’s ire last week after refusing to sign on to a deal under which Chrysler offered to swap $6.9bn of secured debt for $2.25bn in cash.