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Chrysler creditors seek approval to sue Daimler

Chrysler creditors seek approval to sue Daimler
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First Published: Wed, Aug 05 2009. 10 06 AM IST
Updated: Wed, Aug 05 2009. 10 06 AM IST
Detroit: Creditors of Chrysler have asked a bankruptcy court to allow them to sue Daimler AG, arguing that the 2007 sale of the US automaker stripped it of its most valuable assets.
Judge Arthur Gonzalez has scheduled a hearing on the request by the creditors for 13 August.
Daimler, which sold a controlling stake in Chrysler to private equity firm Cerberus Capital Management in 2007, said that the claim by a committee representing Chrysler’s unsecured creditors was baseless.
“This is completely without merit and we intend to defend ourselves vigorously,” Daimler spokesman Han Tjan said.
In a filing with the New York bankruptcy court on Monday, the group representing Chrysler’s unsecured creditors said that they were seeking to recover more than $3 billion.
That recovery would be more than the $2 billion paid to Chrysler’s secured creditors.
The group said that was equivalent to the value of certain unidentified Chrysler assets transferred in 2007 in the deal between Daimler and Cerberus.
Gonzalez cleared the way for Chrysler to emerge from bankruptcy in June in a transaction that gave operational control of the No.3 US automaker to Fiat SpA.
The sale, which was funded and directed by the US government, gave ownership of Chrysler to a trust fund affiliated with the United Auto Workers and the governments of the US and Canada.
Other Chrysler assets, including shuttered plants, remain in bankruptcy under a legal entity now known as Old Carco.
Daimler purchased Chrysler in 1998 but failed to integrate the company’s mass-market brands and with its luxury Mercedes business.
Cerberus took control of Chrysler in late 2007, just as its sales began to tumble with the sharp contraction in US auto sales that began in 2008.
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First Published: Wed, Aug 05 2009. 10 06 AM IST