Chrysler's 16,000 salaried retirees will start their fight this week for their benefits in the automaker's bankruptcy restructuring, with the potential to create a public relations headache for the company.
Salaried retirees promise a different kind of problem than hedge funds, whose challenge to the automaker's restructuring was undercut last week by a court order to reveal their identity.
The retirees are numerous and sympathetic compared to a few shadowy hedge funds which are easily branded by the White House as speculators.
The constituents I represent are salaried retirees who spent their career at Chrysler. They're willing to negotiate but no one has talked to them, said Trent Cornell, an attorney for Stahl Cowen in Chicago who is representing the National Chrysler Retirement Organization (NCRO).
Cornell will ask the judge this week to recognize a committee to represent nonunion retirees. We're trying to get a voice to be heard and get some parity with the union.
Chrysler has proposed selling its healthiest operations to a new company owned by a union-aligned trust and Italian carmaker Fiat
Other operations would remain in bankruptcy court and be used to satisfy unsecured claims, such as unpaid bills from suppliers.
The 250-page document related to the proposal sale makes virtually no mention of nonunion retirees, and for the moment the retirees group said they want clarification of their standing.
We don't know if it's just a question of being overlooked because there were bigger issues to consider, said Mike Aberlich, a spokesman for the NCRO, which represents clerical staff, engineers and executives. We want to hear clarity and have answers to salaried retiree benefits and whether they move to the new company or not.
Cornell said the union and nonunion retirees should be in the same class in the bankruptcy and should be treated equally.
He said the group could ask Chrysler to form a trust that takes on their pension and benefits.
Some retirees are already feeling the pinch of the bankruptcy. Chrysler said 1,171 salaried retirees were not receiving the portion of their benefits that did not qualify under IRS retirement rules for pre-tax savings.
These benefits would remain as part Chrysler to satisfy creditors.
Aberlich said salaried retirees benefits could be worth a couple hundred million dollars and for the moment the NCRO was not trying to delay the sale of the healthiest operations or slow down the bankruptcy. However, he said that could change if the group's committee isn't recognized by the court of if they can't discuss the issue with Chrysler.
Then we might have to get a little more aggressive.
A Chrysler spokesman said the company will address retire benefits through the bankruptcy process.