Chrysler to Shift Suppliers to Fiat-Led Company

Chrysler LLC is preparing to mail letters to about 1,200 of its suppliers detailing a plan to shift contracts to the new company that is expected to emerge from bankruptcy and into an alliance with Fiat Auto Group.

The auto maker says it is in the process of assuming and assigning “the overwhelming majority” of its supplier contracts to the new company. The letter will detail the amount Chrysler has determined it will pay for parts already delivered in order to “cure” all contracts to be assumed and reassigned. It also will tell suppliers how they can begin receiving payment.

“This is very good news for suppliers and Chrysler,” says Scott Garberding, senior vice president and chief procurement officer. “I know there was great anxiety in the supplier community when we announced Chrysler’s Chapter 11 filing.

“This should be a great relief. The terms are fair and far better than the treatment trade creditors usually get in a bankruptcy case, and provide a mechanism for quick resolution of all open issues.”

An initial list of suppliers was filed today in the U.S. Bankruptcy Court for the Southern District of New York. Chrysler says the list is not complete, and it will continue to work with additional suppliers that wish to become part of the new enterprise.

Related document: To view a list of suppliers and amounts owed, click here.