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February 7, 2008 |
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CHRYSLER LLC: Inks Interim Pact w/ Chrysler; Operations Continue Chrysler LLC and Plastech Engineered Products Inc. and its debtor- affiliates have reached an agreement that ends the idling of Chrysler plants as a result of a dispute, Terry Kosdrosky of the Wall Street Journal reports. Pursuant to an interim agreement reached yesterday noon, Plastech resumed its shipment of car parts and components to Chrysler, which enabled the auto maker to resume its plant operations. The arrangement will continue until February 15, says WSJ. The temporary disruption was caused by a tooling dispute over the parties, with Chrysler attempting to grab its tooling equipment over at Plastech's plants and transfer them to other suppliers so its operations would not suffer. Chrysler sued Plastech in Court LLC, seeking a declaration that it has the right to immediate possession of a number of tools used by Plastech. The tools are used by Plastech to manufacture component parts it supplies to Chrysler. Chrysler asserts that, pursuant to certain prepetition agreements, it possesses: (a) unconditional and exclusive ownership interest in all the tools Plastech uses in manufacturing component parts for Chrysler; and (b) unconditional right to possess the tools immediately. Michael C. Hammer, Esq., at Dickinson Wright PLLC, in Detroit, Michigan, notes that Plastech is insolvent and is no longer able to meet the production requirements of Chrysler. Mr. Hammer asserts that if Chrysler does not transfer production of its parts to an alternate supplier, the company will lose production of approximately 500 end-item parts resulting to: -- a halt of the production of its entire corporate fleet of vehicles, which amounts to approximately 2,300,000 vehicles; -- idling of at least 14 plants; and -- the lay off of associated workers for an undetermined period of time. Chrysler has been blamed for Plastech's bankruptcy. Frank Merola, Esq., counsel for the second lien lenders in the Debtors' Chapter 11 cases, told the Honorable Phillip Shefferly of the U.S. Bankruptcy Court for the Eastern District of Michigan that Chrysler's "precipitous" actions caused them to file for bankruptcy, WSJ relates. Chrysler strongly denied this assertion. Judge Shefferly, who commented that the agreement was a "sensible thing", has set February 13 to hear the parties' dispute, WSJ reports. About Plastech Engineering Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/ -- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. As of Dec. 31, 2006, the company's books and records reflected assets totaling US$729,000,000 and total liabilities of US$695,000,000. (Plastech Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/ -- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter-Latin America on Dec. 11, 2007, Standard & Poor's Ratings Services revised its recovery rating on Chrysler's US$2 billion senior secured second-lien term loan due 2014. The issue-level rating on this debt remains unchanged at 'B', and the recovery rating was revised to '3', indicating an expectation for meaningful (50% to 70%) recovery in the event of a payment default, from '4'. |
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