Chrysler LLC plans to transfer health benefits for its 19,000 non-union retirees and their spouses to a new company led by Fiat S.p.A., a lawyer for the retirees said today.
The benefits have cost the company $7.4 million a month, Chrysler has said in court documents, according to retiree lawyer Trent Cornell of Stahl Cowen in Chicago.
Chrysler lawyers told U.S. bankruptcy judge Arthur Gonzalez today that the new company would cover their benefits, he said.
This was a very good day for the retirees, Cornell said in an interview.
Chrysler sale documents for Fiat had made little mention of plans for the non-union retirees while explicitly detailing benefits for 80,000 union retirees.
Chrysler spokesman Fred Spar did not respond to emailed queries about plans for covering the retirees.
The non-union retirees are white-collar workers such as clerical workers, engineers, accountants, salespeople and middle management, Cornell said.
Pedro Jimenez, a lawyer representing Chrysler, said the Fiat-led group plans to continue benefits to nonunion employees who retired with a final salary of $55,000 or less for at least one year.
Other salaried retirees will pay higher premiums for their healthcare coverage, said Jimenez, who is with Jones Day in New York.
The retirees had asked for a committee to be formed that would represent them in court.
This request became moot when Chrysler agreed to continue benefits, and the judge denied the motion, Cornell said.
Automotive News erroneously reported last week that the judge had approved the committee. The error arose when a draft judges order was filed in court without being labeled a draft.