Chrysler creditors want to sue Daimler

[rickaren]

Chrysler creditors want to sue Daimler, ex-directors

Posted Wednesday, Aug 5, 2009, 1:51 pm in Employee News

Daimler AG, the German carmaker that used to own Chrysler LLC, stripped the U.S. carmaker of its most valuable assets for “grossly inadequate consideration” in a series of transactions in 2007, Chrysler creditors said in court documents filed yesterday, Bloomberg news reported.

The official committee of Chrysler’s unsecured creditors wants to sue Daimler, Chrysler’s former parent, and four former Chrysler directors, according to the papers filed asking the U.S. Bankruptcy Court in New York for approval to pursue the suit, the news service said. The bankruptcy court is overseeing the wind-down of Chrysler after the company sold most of its assets to Italy’s Fiat SpA, a UAW union benefit trust and the U.S. and Canadian governments in June.

“The committee’s investigation has confirmed that the debtor’s estate possesses claims against Daimler and related parties that, in the committee’s view, are meritorious and have enormous potential value,” according to the court filing by creditor attorneys from Kramer Levin Naftalis & Frankel LLP.

Daimler and Cerberus Capital Management LP, under an agreement with the Pension Benefit Guaranty Corp., agreed to assist Chrysler’s pension plans by making cash contributions and forgiving loans, Bloomberg news said. In exchange, Chrysler, Cerberus and Daimler waived all claims against each other related to Cerberus’s acquisition of most of Chrysler in 2007. Those waivers don’t apply to claims brought by Chrysler’s creditors, according the filing, the story said.(Bloomberg)