Chrysler Salaried Retirees Prepare to Defend Their Benefits

NEW YORK, May 4, 2009 -- The National Chrysler Retirement Organization has retained the Chicago law firm of Stahl Cowen Crowley Addis LLC to represent non-union retirees in Chrysler's bankruptcy proceedings in New York. Attorney Trent Cornell leads the team that has represented retirees in several other large bankruptcies, including recent cases involving Dana, Intermet and Delphi.

Cornell will petition the Bankruptcy Court this week in New York to form a Retiree Committee through Section 1114 of the bankruptcy code. Section 1114 was enacted by Congress in the wake of several high-profile bankruptcies where courts had allowed companies (notably LTV/Bethlehem Steel) to summarily cut the healthcare benefits of thousands of retirees and their dependents. It is Section 1114 that gives non-union retirees a voice in a bankruptcy.

"There are nearly 16,000 salaried retirees of Chrysler and their families who are dependent on the healthcare and pension benefits they earned," said NCRO President Chuck Austin. NCRO is the only representative of Chrysler salaried retirees, and its members represent a wide range of disciplines, from clerical and administrative staff to engineers to managers.

"Salaried retirees at Chrysler are caught between a rock and a hard place," added Austin. "On one hand, in bankruptcy Chrysler will seek to cut off every liability that it can. On the other, the United Auto Worker-represented retirees have protection and government support that salaried retirees don't have. Our goal is to assure balanced and even treatment for all retirees."

Austin pointed out that, while President Obama praised the UAW for sacrificing benefits, Chrysler has reduced or canceled compensation and benefits for its non-union employees and retirees over a period of many years, in an effort to help the Company control costs and become more competitive.

Last year, Chrysler salaried retirees were the only group among retirees or employees to lose life insurance. In January 2007, salaried retirees were asked to share premium increases according to ability to pay (100% for high pension earners). Union retirees will begin to pay premiums for their health care coverage when the VEBA goes into effect in 2010.

On average, Chrysler salaried employees in 2009 paid about one-third of their total health care bill (including premiums and out-of-pocket costs such as deductibles and co-insurance), about three times the rate paid by UAW employees, according to Chrysler data. Similar comparisons for retirees are difficult to access, said Austin, but would be "in the same neighborhood."

Austin did praise the UAW for its part in attempting to avoid bankruptcy. "They came to the party in a big way," he said. "We don't want the UAW package; we just want to be treated fairly."

Cornell added that a Salaried Committee would help standardize treatment of all retirees, but is critical to those who are vulnerable. "In some cases, especially for high-risk elderly retirees, losing or compromising health care could have serious consequences, he said. "We hope that Judge Gonzalez will uphold the intent of Section 1114 by giving these 16,000 retirees and their families an opportunity to be heard and to defend themselves."