Judge denies Chrysler retirees’ motion
NEW YORK — A bankruptcy judge on Thursday denied a request from a group representing Chrysler LLC’s retired white collar workers to appoint an official retiree committee to take part in the automaker’s bankruptcy proceedings.
U.S. Judge Arthur Gonzales said that any decisions regarding the future of retiree benefits ultimately will be made by the automaker’s new owners and as a result there isn’t much point in the retirees group negotiating with Chrysler now.
“I don’t deny for a moment that the debtor has influence into the process in terms of advice and expertise, Gonzales said. “But still, at the end of the day its the new entity that’s making that decision not the debtor.”
Attorneys for the National Chrysler Retirement Organization claimed that responsibility for the group’s health care benefits might not be transferred to the new company expected to be created by the proposed sale of the vast majority of Chrysler’s assets to a group controlled by Italy’s Fiat Group SpA.
As a result, they argued that the group had the right to form a committee to negotiate with Chrysler during the bankruptcy process in an attempt to protect those benefits.
Attorneys for Chrysler said in court Thursday that the current plan is for the salaried retirees’ benefits to be preserved under the new company, although the costs of those benefits would increase for higher paid retirees. But they acknowledged that the final decision will be made by the new company.
Gonzales gave the retirees group the right to present its motion again if circumstances change as Chrysler’s bankruptcy case progresses. He also noted that the group has the option of opposing the sale if and when it comes up for court approval.
Chrysler currently provides benefits to about 19,000 salaried retirees and surviving spouses at an estimated cost of about $7.3 million a month. Those under the age of 65 currently receive medical and dental benefits similar to those of active Chrysler employees, while retirees 65 and older receive contributions to health care accounts that they can use to pay for costs not covered by Medicare.
The automaker currently has the right to change those benefits as it sees fit and has in the past, said Chrysler Attorney Pedro Jimenez.
Meanwhile, health care benefits for Chrysler’s union-covered retirees are expected to be preserved under the new company.
Under the current deal with Fiat, a United Auto Workers union trust fund that will take over health care expenses for Chrysler’s union retirees starting next year received a 55 percent stake in the new Chrysler, plus the company will pay $4.6 billion into the trust between now and 2023.