Chrysler LLC, Auburn Hills, Mich., won approval today from U.S. Bankruptcy Court Judge Arthur J. Gonzalez on an agreement in which Daimler AG would pay $600 million into Chryslers pension plan and guarantee potentially to pay $200 million more, according to a court filing of the judges order.
The judge approved the agreement reached April 27 between Chrysler, Daimler, the PBGC and Cerberus Capital Management three days before Chrysler filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in New York.
Daimler paid $200 million when the agreement was reached in April, and also agreed to pay $200 million to the plan in each of the next two years. In addition, Daimler would pay $200 million to the PBGC if the Chrysler plan is terminated and taken over by the agency before August 2012.
The agreement ended all other obligations from Daimler to the Chrysler plan, waived repayment of all Daimlers outstanding loans to Chrysler and turned over Daimlers 19.9% share of Chrysler to Cerberus, raising to 100% the private equity firms ownership in Chrysler just before the bankruptcy filing.
The Chrysler plan was $9.3 billion unfunded as of Nov. 30, although the PBGC would assume responsibility for only $2 billion of that amount if the plan were terminated, leaving $7.3 billion in lost benefits.
Chrysler had U.S. defined benefit assets of $21.6 billion as of Sept. 30, according to Pensions & Investments Jan. 26 report on the largest U.S. retirement funds.