Chrysler VEBA Funded in Post-Bankruptcy Deal

May 1, 2009 ( - Under a deal worked out to govern Chrysler's trip into U.S. Bankruptcy Court, the U.S. Treasury Department will administer the 55% share in the post-bankruptcy company to be held by Chrysler's LLC's Voluntary Employee Benefit Association (VEBA).

A Detroit News account said that the equity stake in the new company was outlined in the terms of the Chrysler-Fiat alliance.

The 55% equity position in the new Chrysler was in place of half the cash – or about $4.5 billion – the carmaker would have paid into the trust to fund retiree health care costs. The VEBA will be funded by a note payable over 13 years at 9%, according to other media reports (see  Total Benefits: Viva VEBA ).

The Detroit News story said the VEBA will have the right to select one independent director in the new company but will have no other voting authority.

Officials said the Chrysler Pension Plans will be preserved and their stability will be strengthened from a Daimler contribution of $600 million (see  PBGC Offers Reassurance about Chrysler Bankruptcy ).