Chrysler LLC plans to transfer virtually all of its Tier 1 supplier contracts to the Fiat-led company that will emerge from bankruptcy and pay them more than $875 million, according to documents released Friday, May 15.
Chrysler will notify 1,200 Tier 1 suppliers of its intent to pay them 100 percent of what they are due for parts delivered before the companys April 30 bankruptcy filing, a Chrysler spokesman told Automotive News.
The biggest recipients among the partial list released in Bankruptcy Court are Continental AG and Johnson Controls, each with contracts worth about $70 million; Magna International Inc., $63 million; Fiat, $45 million; Hyundai Mobis, $38.2 million; and Germersheim Spare Parts, $37.8 million.
This is very good news for suppliers and Chrysler, purchasing chief Scott Garberding said in a statement. The terms are fair and far better than the treatment trade creditors usually get in a bankruptcy case and provide a mechanism for quick resolution of all open issues.
A list identifying two-thirds of the 1,200 suppliers was filed in Bankruptcy Court. A tally of the individual contracts for those 800 companies totals more than $875 million.
Chryslers suppliers will get the first 40 percent of their payment in the next four weeks, the spokesman said. The remainder will be paid when the sale of Chrysler assets to Fiat is closed, Garberding said.
Companies that will not receive notification letters include those who are being dropped as suppliers, nonproduction vendors and suppliers whose contracts are so complex that they require individual negotiation.