Judge hears motions in Chrysler bankruptcy hearing

By Steve Korris | May 21, 2009

NEW YORK CITY - Former Chrysler worker William Wilson of Toledo, Ohio, graciously gave the bankrupt automaker and the U.S. Treasury a week to decide whether to cut off disability benefits for workers who don't belong to a union.

By telephone in a May 20 hearing at U.S. bankruptcy court in New York City, Wilson agreed to await a list of contracts and agreements the new Chrysler will assume.

The U.S. Treasury plan for reorganizing Chrysler preserves disability benefits for the United Auto Workers but says nothing about nonunion workers like Wilson.

He asked Bankruptcy Judge Arthur Gonzalez, "How can my taxpayer money bail out Chrysler while 250 of us are being thrown under the bus?"

Chrysler lawyer Corinne Ball said there was no specific language but told Gonzalez she would file the new Chrysler's contracts and agreements that day or the next.

Gonzalez asked Wilson if it was all right to adjourn his motion to May 27.

Wilson said, "I understand."

That set the tone for the day, because Gonzalez enforced an expectation that Chrysler will soon regain the capacity to meet its obligations.

He silenced suppliers who complained about bills that hadn't reached their due dates.

He denied an emergency motion to stay the proceedings so public employee pension funds in Indiana could challenge the constitutionality of the reorganization.

The pension funds pleaded that the plan favors some lenders over others in violation of bankruptcy code.

They wanted to freeze the action in bankruptcy court pending a ruling from district court, but Gonzalez said they would still have recourse if he denied a stay.

He said they didn't show that the absence of a stay would diminish the value of their $42.5 million investment.

He said delay could harm Chrysler and interfere with its agreements.

The agenda for the hearing had promised other disputes, but Chrysler and Treasury resolved them the night before.

Johnson Controls and Panasonic succeeded in changing a "shall" to a "may."

Union Pacific killed a whole paragraph.

The plan calls for Italian automaker Fiat to buy Chrysler's assets.

Gonzalez faces a tight schedule because Fiat's financing will expire on June 15.

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