Chrysler Group LLC, created out of the best assets from its bankrupt predecessor, can't make new cars until it gets needed tools tied up in legal disputes, a lawyer told a judge in charge of the reorganization.
The streamlined carmaker, created two weeks ago, may need mediation to resolve disputes over access to tools, Frank Oswald, a Chrysler lawyer from Togut, Segal & Segal LLP, told U.S. Bankruptcy Judge Arthur Gonzalez in Manhattan today. Oswald was updating Gonzalez at a hearing on disputes over "cure costs," or amounts owed to suppliers to resolve contracts signed before Chrysler's bankruptcy.
"We don't want to have a situation where, after rushing to get the sale closed in 42 days, Newco is unable to start up production because we don't have necessary parts," Oswald said, referring to the new Chrysler entity.
Of 500 objections to Chrysler's proposed cure amounts, only 70 remain unresolved, Oswald said in an interview after the hearing. He said he doesn't know of specific tools Chrysler Group is missing. Oswald said lawsuits may need to be filed "to the extent that there are recalcitrant suppliers."
One tool dispute was resolved after Chrysler sued Logghe Stamping Co. on June 4. The automaker demanded in the lawsuit to be recognized as the owner of the tools immediately, saying they were property of Chrysler's estate.
Deliver the Tools
According to court documents filed June 9, the parties reached an agreement under which Logghe will cooperate with Chrysler to deliver the tools, and Chrysler will reimburse Logghe for $10,000 to move them. The automaker also will pay the company $62,488 to resolve a claim against Chrysler.
