Chrysler Takes Daimler To Court

Chrysler Group LLC. filed a lawsuit against its former parent Daimler AG (DAI) in a federal court in New York, charging it with having failed to honor supply contracts for parts essential for the production of key 2010 Chrysler vehicles.

Chrysler claimed that it would have to halt production of its 2010 model-year vehicles, Dodge Challenger, Charger, Chrysler 300 and Jeep Grand Cherokee models at its plants in Brampton, Ontario and Jefferson North in Detroit due to the disruption in the supply of components including steering columns and torque converters. The company will also have to idle workers and cease related orders from other suppliers.

The German automaker, Daimler believes that Chrysler’s claims have no merit. Daimler is willing to resolve the issues with Chrysler on new and modified supply agreements.

In 2007, Daimler had sold the wholly-owned Chrysler to a private equity firm Cerberus Capital Management, retaining a 20% stake. However, Cerberus acquired the remaining stake just before Chrysler’s bankruptcy. Daimler has been supplying diesel engines, steering columns and torque converters to Chrysler under previously negotiated contracts.

The Chrysler group, which emerged from bankruptcy in June this year, is now managed by the Italian automaker Fiat SpA who bought most of Chrysler’s assets. The remaining assets in bankruptcy are now referred to as Old Carco LLC.

Earlier this month, the creditors of Old Carco LLC have also filed a suit against Daimler claiming that it unlawfully stripped billions of dollars in assets from Chrysler before the sale to Cerberus.

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