Thread: Iacocca losing Chrysler cars, pension

Iacocca losing Chrysler cars, pension

The one-time Chrysler savior and American business icon is losing the perks he won after securing a government loan guarantee in 1979 that pulled the automaker back from the brink of bankruptcy.

Bankruptcy is cruel. The man credited with saving Chrysler the first time around now must buy his once-free cars or give them back by Sunday.

Lee Iacocca, now 84, led a Chrysler turnaround in the 1980s that hinged on the federal guarantee of $1.5 billion in loans, guarantees won largely on the charismatic executive's persuasive appearances before Congress and masterful public-relations moves such as cutting his salary to $1 a year. He later became the public face of his company, pitching cars personally with the line, "If you can find a better car, buy it."

Iacocca retired a hero in 1992. Among his benefits: company cars for life.

Chrysler averted bankruptcy, repaid the loans seven years early and enjoyed a decade of prosperity before its merger with Daimler-Benz In 1998.

This time around, though, Chrysler couldn't dodge bankruptcy. Its plan for emerging from Chapter 11 would create a "new Chrysler" that's owned by unions, the U.S. and Canadian governments, and Italian automaker Fiat. The $2 billion sale of assets from old Chrysler to new Chrysler could be approved as soon as today.

But Iacocca and other former executives and board members won't see a return of this time-honored Detroit perk. And it's likely they won't see much of their pensions, either, which are unsecured claims that will be paid behind those of secured creditors.

For those interested, Iacocca's chosen rides were a Town & Country minivan and a 300C sedan.

Chrysler issued a statement that read in part: "We regret the need to take this action but it is important that the Company be in compliance with the requirements of bankruptcy law."


GM likely to join Chrysler in bankruptcy next week
Meanwhile, General Motors is expected to file for bankruptcy protection as early as Monday. The company is trying to secure whatever cost concessions it can beforehand. Experts say the better the shape it's in before seeking Chapter 11, the leaner and stronger it can be when emerging.

Shares fell below $1 for the first time on Friday. A bankruptcy filing would wipe out shareholders.

On Thursday, a bloc of GM's biggest bondholders agreed to a sweetened deal to wipe out $27 billion of the automaker's unsecured debt in exchange for company stock. And today, GM's union employees finish voting on whether to accept lower benefits.

All told, the U.S. government would own 72.5% stake in the restructured automaker after it emerges from bankruptcy protection. A United Auto Workers trust that will take over retiree health care expenses will get 17.5%, and the old GM, effectively owned by the bondholders, would get the rest

http://articles.moneycentral.msn.com/In ... nsion.aspx

Boy am I glad they gave them all of our money because bankruptcy would destroy the US.

Little noticed in the entire mess is how AIG fatcats are supported by taxpayers.