Bankruptcy lightning has already stuck twice at companies Lutz has led. GM will make it thrice.
The list of creditors that are owed big money by bankrupt Chrysler LLC includes many of the usual companies that are suppliers to the auto industry. But not all of them are immediately obvious, even to veterans of what remains of the auto supplier’s beat. So it’s not surprising that Johnson Controls is owed $50 million, or Continental Automotive, $46 million, or Cummins Engine, $44 million. These are all large, global companies that have been in the auto arena for decades or more, and are among the biggest creditors that would lose the most money if Chrysler doesn’t revive itself.
It’s puzzling that Chrysler’s ad agency, BBDO Detroit Incorporated, is the second largest creditor, at $58,055,133.44? Who would have thunk it! Well maybe it’s like American beer, the advertising and promotion cost more that the production of the stuff inside the can. Still, this is more money owed for advertising than steel, since U.S. Steel Corporation is owed only $16,182,772, as of April 30.
Then we have an order entered Saturday by the Honorable Arthur J. Gonzalez, the presiding judge in the Chrysler bankruptcy matter. It grants a motion for admission to practice pro hac vice, or for the occasion, to Michael S. Leib, a member in good standing of the bar in the State of Michigan to practice in this one case before the Federal court in New York for a $25 fee. This without question is going to be much smaller than the fee he charges his client, creditor Robert A. Lutz.
Lutz, who officially left his latest job as vice chairman of General Motors on the same day the bankruptcy was filed, is a former vice chairman and president of Chrysler where he worked for 12 years starting in 1986. Lutz is also a former CEO of bankrupt Exide Technologies.
So Lutz will submit a claim against Chrysler. As to just what and how much, my request for comment has thus far gone unanswered. However, a claim will have to filed and then ruled on by the court in the coming weeks.
Since Lutz’s compensation ran in the millions of dollars annually for decades, I don’t think it will be for the elimination of dental coverage, or eye glasses, or even prescription drug coverage for erectile dysfunction medications that UAW members have lost as part of the bankruptcy.
Unless the emerging Lutz claim is enormous, leading the list of the suppliers, drum roll please, is one Ohio Module Manufacturing Company in Toledo, which is owed more than $70 million.
Ohio what? Well, don’t feel bad, I had to look it up too. It turns out that Ohio Module makes chassis for the Jeep Wrangler, and is itself a subsidiary of Hyundai Mobis, (현대모비스), the parts supplier to Hyundai and Kia. I guess they, like others, are in a no won situation.
Let’s not forget the biggest creditors of all. Taxpayers will be owed roughly $10 billion dollars under the restructuring plan. How secure this debt is will depend on whether a new Chrysler can become and stay profitable, and generate enough cash to pay it back. It has been done before under an American leader of Italian descent. Now we’ll see if the new CEO, Sergio Marchionne, a native Italian, can make it two for two.
| Chrysler Top Ten Creditors |
| Ohio Module Mfg. Co. $70,337,248 |
| BBDO Detroit Inc. $58,055,133 |
| Johnson Controls Inc. $50,312,511 |
| Continental Automotive $46,995,802 |
| Cummins Engine Company $43,912,930 |
| Germersheim Spare Parts $36,231,566 |
| Comau Inc. $32,069,462 |
| Visteon Corp. $25,608,790 |
| New Process Gear $19,636,149 |
| Denso International $18,704,831 |
Iam a surviving spouse of a Chrysler management retiree, non-union. I am receiving a pension and Blue Cross Medical Insurance that includes prescription coverage and I would like to know where I stand and if I’m going to lose my coverage. I await your response.
Isabella
Isabella: The National Chrysler Retirement Organization has retained the Chicago law firm of Stahl Cowen Crowley Addis LLC to represent non-union retirees in Chrysler’s bankruptcy proceedings in New York. Attorney Trent Cornell leads the team that has represented retirees in several other large bankruptcies, including recent cases involving Dana, Intermet and Delphi. Bankruptcy courts have allowed companies, notably LTV/Bethlehem Steel, to summarily cut the healthcare benefits of retirees and their dependents.
“There are nearly 16,000 salaried retirees of Chrysler and their families who are dependent on the healthcare and pension benefits they earned,” said NCRO President Chuck Austin. NCRO is the only representative of Chrysler salaried retirees, and its members represent a wide range of disciplines, from clerical and administrative staff to engineers to managers.
“Salaried retirees at Chrysler are caught between a rock and a hard place,” added Austin. “On one hand, in bankruptcy Chrysler will seek to cut off every liability that it can. On the other, the United Auto Worker-represented retirees have protection and government support that salaried retirees don’t have. Our goal is to assure balanced and even treatment for all retirees.”
See: http://www.chryslerretirees.com/
Where you stand? I hope you didn’t blow all your money on country clubs and vacations otherwise you’ll be working as a Walmart greeter.
Ken: What you say may all be true, but when there’s no money, there’s no money. Good luck collecting anything.
I wonder how much they have in BANK OF NOVA SCOTIA which holds huge sums of American money from the auto boys that are looking for sympathy while the hide their true worth.
These white collar boys ARE elite soldiers at hiding from the IRS and have special training at acquiring huge wealth
Scotia bank. Don’t forget their motto, “You’re Richer than you Think!”
Most of these salaried workers made less money then the UAW line workers. All your commenters think, just because it says salaried, that they made huge sums. Salaried workers include office workers, first line foreman, lab tecs and so forth. I’m a retired GM production engineer with 30 years in. My retirement is about half of what a Baltimore longshoreman gets.
By promoting artificial distinctions between salary and hourly workers, the Big Three were able to prevent further unionization. But the granting of similar benefits to white collar workers, which the union fought hard for and established as compensation, was not guaranteed by anything. The result is that unionized workers have better protection than non-unionized workers. And in bad times there is nothing stopping the companies from reducing or taking away the benefits for salaried workers.
I am a Chrysler lay-off person. I was receiving IPP – income Protection Plan payments. They’ve stopped with “I’m sorry for the hardship” from Chrysler. This was my only source of income since my unemployment benefit has run out. Any news on that?
US Govt. & the Germans are what destroyed this “Brand”. When are we gonna have FAIR TRADE? When are we gonna stop shipping OUR JOBS overseas so these ungreatful so-called allies benefit? While the “EU” cronies for corporate Germany call our companies “Monopolists”, their “lil” companies rape rob & pillage our companies, while the Swiss Hedge Funds manipulate the price of a barrel of oil, WHEN is the US GOVERNMENT gonna start protecting US?
Cabdriver … Chrysler was not destroyed by the Germans or the US Government. They were destroyed by consistently under-developed and under-performing products over many years. They have been at the bottom of the heap for customer satisfaction for years. There are very few bad cars these days. The really bad ones used to be the likes of Ladas and Yugos. These days their place has been taken by Chrysler. That is the problem. The US Government is doing what it can to put the industry back on its feet again in a sustainable manner. It is not to blame for Chrysler’s problems.