Judge rejects former Michigan firm execs' pension claims

A U.S. Bankruptcy judge has denied pension claims submitted by former executives with Chrysler LLC. The judge ruled that the five ex-executives did not qualify for supplemental pension coverage as granted by the Michigan auto giant's 2009 bankruptcy. As part of that bankruptcy, Chrysler agreed to pay for active executives' supplemental pensions but did not extend the same protection to retired executives.

The judge asserted that the former executives' benefits should have been transferred to the new post-bankruptcy Chrysler that emerged from bankruptcy in June 2009. The bankruptcy essentially upended the business and its few remaining viable assets, all of which were transferred to a new company as most of those holding the Chrysler's debt lost their investments. Following the bankruptcy, Italian automaker Fiat purchased 20 percent of Chrysler. The company has since paid back the majority of its $12.1 billion in taxpayer loans.

The five former executives' attorney quickly filed an appeal in response to the bankruptcy judge's ruling, arguing that Chrysler is wrongfully attempting to pay only some of his client's benefits. The firm's bankruptcy documents only promised full pension obligations to executives above a certain level, and excluded retired executives. The attorney claims that all of the company's pensions constitute executory contract and demanded that they be transferred to reformed Chrysler. He estimated the supplemental pensions for the five executives total over $10 million, about $3 million of which would go to Bob Lutz, Chrysler's former COO and president.

Disputes involving pensions, contracts and other employment-related issues in Michigan can be exceedingly complex for those without legal knowledge, particularly those in which a company has filed for and exited bankruptcy. This makes it important for any company or individual involved in such a dispute to seek a qualified attorney specializing in business and commercial law. This is the best way for such parties to ensure their interests and rights are properly represented in court.

Source: Detroit Free Press, "Ex-Chrysler execs' pension claims rejected," Greg Gardner, March 13, 2013