Daimler in the dock
August 5, 2009
Daimler, which acquired Chrysler in 1998 but failed to integrate the company's mass-market brands with its luxury Mercedes business, sold a controlling stake in Chrysler to private equity firm Cerberus Capital Management in late 2007, just as its sales began to tumble due to the sharp contraction in the US auto industry.
In a filing with the New York bankruptcy court on Monday, the group representing Chrysler's unsecured creditors said they were seeking to recover more than $3 billion (2.08 billion euros) from the German company, a pay-out which would be more than the $2 billion paid to Chrysler's secured creditors.
The group said that was equivalent to the value of certain unidentified Chrysler assets transferred in 2007 in the deal between Daimler and Cerberus.
The sale, which was funded and directed by the US government, gave ownership of Chrysler to a trust fund affiliated with the United Auto Workers and the governments of the United States and Canada. Other Chrysler assets, including shuttered plants, remain in bankruptcy under a legal entity now known as Old Carco.
Daimler said the claim that it had stripped Chrysler of its assets in deals before the sale to Cerberus was baseless.
"This is completely without merit and we intend to defend ourselves vigorously," Daimler spokesman Han Tjan said.
nda/AP/Reuters
Editor: Nancy Isenson