A health care board linked to the UAW that owns a controlling stake in now bankrupt Chrysler LLC needs to begin selling shares as soon as possible to meet its obligations to retired autoworkers, the union's president told NPR.
The Voluntary Employee Beneficiary Association, or VEBA, which covers the health care needs of retired Chrysler workers, "is going to be stressed in order to pay the benefits," United Auto Workers President Ron Gettelfinger said Friday.
"We do not have the ability [to hold a long-term stake] because of the cash needed in the VEBA," he told NPR a day after the nation's third-largest automaker filed for Chapter 11 bankruptcy protection. The health care association will need "as soon as we possibly can ... to start selling these shares."
In order to receive billions in government aid, Chrysler agreed to hand over the company's stock in lieu of paying back money it owed to the VEBA.
At a hearing Friday in Manhattan bankruptcy court, Chrysler attorney Corinne Ball said the company will file a motion to sell most of its assets to Italian automaker Fiat Group SpA before Saturday morning.
It's part of a process designed to ensure that the bankruptcy process is quick and "surgical."
"I don't think that any American can doubt that these are extraordinary times," Ball said at the hearing. "And we are quite mindful of the view of many experts that no car company can survive in Chapter 11. To that we say, 'Yes we can."'
Chrysler hopes to save the company through a top-to-bottom reorganization and plans to build cleaner cars in an alliance with Fiat. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.
The automaker plans to ask bankruptcy court Judge Arthur Gonzalez to let it start using a new infusion of $4.5 billion in loans from the Treasury Department so it can operate under bankruptcy protection.
Gonzalez approved Chrysler's motion to allow the automaker to pay $48.8 million in employee and contract worker pre-bankruptcy wages, benefits and businesses expenses. The motion also references an estimated $86 million in employee vacation benefits that it may not ultimately have to pay.
Chapter 11 protection typically allows a company to continue paying workers and basic utility costs as it restructures.
The judge also approved motions that will allow Chrysler to honor its warranties.
Eventually, Judge Gonzalez will have to sort out how to deal with $6.9 billion in debt owed to Chrysler's creditors. Four of the largest banks holding 70 percent of the debt agreed this week to a deal that would give them $2 billion.
But a collection of hedge funds refused to budge, saying the deal was unfair and would return only a small fraction of their holdings. President Obama on Thursday said the funds were seeking an "unjustified taxpayer-funded bailout."
The president has said he is convinced that Chrysler can be saved, along with the company's 30,000 jobs and tens of thousands of jobs at suppliers, dealers and other businesses.
Gettelfinger told NPR that the UAW had done everything possible to avoid the bankruptcy but that he felt confident that the alliance with Fiat would help turn the company around.
From NPR staff and wire reports