Daimler facing ‘old’ Chrysler lawsuits

[rickaren]

Daimler facing ‘old’ Chrysler lawsuits

Posted Friday, Aug 14, 2009, 2:37 pm in Employee News

Daimler AG’s headaches over Chrysler haven’t faded yet, according to the Detroit Free Press.

Those owed money by the old Chrysler may sue the German automaker over allegations it diverted $9 billion from Chrysler two years ago, U.S. Bankruptcy Judge Arthur Gonzalez ruled Thursday, the paper reported. Gonzalez said Chrysler’s unsecured creditors may file the suit on behalf of Chrysler before Aug. 18, but they may not use cash provided by the U.S. Treasury department, the Free Press said.

Instead, two law firms—Susman Godfrey LLP and Stutzman, Bromberg, Esserman & Plifka—will represent the old Chrysler, the leftover assets that are not part of the government-backed bankruptcy sale to Chrysler Group LLC, the paper said. The law firms will receive a $2 million fee and 20 percent of any award up to $200 million. The case likely will be argued in U.S. District Court for the southern district of New York, the Free Press said.

The creditors charge that Daimler stripped Chrysler of “its most valuable assets” in the 2007 sale of 80.1 percent of Chrysler to Cerberus Capital Management, the paper said. However, the bankruptcy court document outlining the charges was heavily redacted for confidentiality reasons, making it difficult to understand the allegations, the story said. (Detroit Free Press)