FAQs about restructuring, bankruptcy for employees

Posted on Thursday, April 30th, 2009 at 4:54 PM EDT.

(Please note that this document will be updated to reflect the most current information available. Chrysler reserves the right to amend, suspend or terminate all or any provision of its employee benefit plans and programs.)
 

General

 

1. What’s the status of plans for salaried employees taking a two-week  unpaid leave? (Added May 8)
Message from Nancy Rae:
By now you’re aware that Chrysler has received interim approval for $4.1 billion of Debtor-In-Possession (DIP) financing to enable the Company to meet its working capital, payroll and general business needs.

Conditions of the DIP financing require sacrifices beyond those already made by many of Chrysler’s stakeholders, including our employees represented by the UAW and CAW, our dealers and our suppliers. We realize that you, too, have already made significant sacrifices to help Chrysler move toward its goal of long-term viability.

You may have read that the conditions of our DIP financing include a mandatory two-week, unpaid leave for NBU employees to achieve a cost reduction equivalent to two weeks of salary. While this two-week leave may need to be implemented, we are working hard to assess our progress toward the budget savings that were described in our court filings and hope to achieve sufficient savings to delay any unpaid leave or to render it unnecessary.  In addition, the demands being placed on many of you to close the sale transaction as quickly as possible and take other steps necessary to launch a new Chrysler may make it difficult to implement unpaid leave for many employees.  In the meantime, we appreciate your continued focus on cost savings and cost reduction at this critical time.

We appreciate your continued support as we navigate through this restructuring period that will enable us to emerge as a vibrant company with bright, long-term prospects.

2. Which plants will be closing? (Added May 8)

While most manufacturing operations have been temporarily idled in order to reduce dealer inventory and as part of the restructuring process, this idling was not the result of the bankruptcy filing, and we expect that most workers will be back on the job following the bankruptcy proceedings and the formation of the new company.

The plants currently scheduled for closing are as follows:

Sterling Heights (Mich.) Assembly Plant:  A severe decline in the market has resulted in reduction of volumes, and thus made operation of this plant not possible.  The plant is expected to continue operation through December 2010.

Kenosha (Wis.) Engine:  Unprecedented reduction in volume and demand for products has resulted in the decision to idle the plant in December 2010.

Detroit Axle:  All required work will be moved to a new facility that is being developed in nearby Marysville, Mich.  The plant will be idled in December 2010.

Twinsburg (Ohio) Stamping:  Due to deteriorating volumes, and in order to optimize capacity, existing volume will be transferred to Warren Stamping and Sterling Stamping plants effective March 2010.

Conner Avenue Assembly Plant (Detroit):  The facility and vehicle platform has been for sale since 2008.  The site is scheduled to idle December 2009.

St. Louis Assembly Plant North (Fenton, Mo.):  Due to volume reduction in the truck segment, capacity will be optimized by moving RamBox™ production to Warren Truck Assembly Plant effective third quarter of 2009.

Newark (Del.) Assembly Plant (closed December 2008)

St. Louis Assembly Plant South (Fenton, Mo.) (closed October 2008)

3. Should employees continue to come to work?

Yes, employees and contractors should continue to report to work, as scheduled, unless they have been specifically notified not to do so by the company.   As part of the restructuring, all manufacturing operations will be temporarily idled effective Monday, May 4, 2009.  Normal production schedules are expected to resume when the transaction is completed.

4. How will the recent announcement impact me?

All employees will transition to the new company. Your salary will be, at least initially, equal to your current base salary. 

Under the proposed transaction with Fiat, employee benefits will initially be provided on terms no less favorable in the aggregate than the benefits provided under the current benefit plans. 

5. What happens during the period after filing and before we transition to the new company? 

Normal payroll practices will continue after the filing date.  Benefits will generally continue for active employees without interruption, though the Company reserves the same right to amend or terminate benefit plans at any time that it had prior to the filing date.

6. Can I continue to charge my business expenses?

Yes. The approval process, guidelines and procedures regarding business expenses have not changed.  You may continue to submit any qualified business expenses in accordance with company policy. 

7. Where should employees go to get more information about the restructuring process?

Chrysler will provide regular updates via scoop.chrysler.com, www.chryslerrestructuring.com, or by calling our restructuring information line at 1-877-271-1568 (United States and Canada) or +1-503-597-7708 (International).

8. How long do you anticipate plants to be idled?

Most manufacturing operations will be temporarily idled effective May 4.  Normal production schedules will resume when the transaction is complete, which is anticipated within the next 30 to 60 days.

 9. Will Chrysler Financial continue to service current customers? (Added May 8)

Yes. Chrysler Financial will service and manage the retail installment loans and leases written with Chrysler Financial.

10. What is the official date of filing for bankruptcy? (Added May 8)

On April 30th, 2009, Chrysler LLC and twenty-four (24) of its affiliates filed petitions in the United States Bankruptcy Court. 

11. What happens to NBU employees on personal LOA ? (Added May 18)

Employees on approved personal LOA are expected to continue to follow policies applicable to their leave.

12. What happens to NBU employees on FMLA? (Added May 18)

In accordance to the Family Medical Leave Act, eligible employees may request to take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons.

13. What happens to NBU employees on Military LOA? (Added May 18)

Employees on an approved Military leave of absence will be expected to follow reinstatement policies upon completion of military duty.

14. Will the restructuring result in further personnel reductions? (Added May 19)

It is premature to speculate on the impact that the restructuring will have on personnel staffing levels.

15. Why am I receiving mailings from the bankruptcy court? (Added May 20)

Throughout the restructuring process, Chrysler employees, as well as other important stakeholders, will receive certain motions and other documents like the one enclosed when the applicable bankruptcy rules require that you be notified as what is called an “interested party.”  No further action on this item is required at this time unless recipients wish to exercise their legal right to object to the relief requested.  Please read the information carefully and contact the Restructuring Hotline at 1-877-271-1568 if there are questions.

16. Will the new company have the same staffing levels as currently? Are further reductions planned?  (Added May 26)

It is premature to speculate on the impact that the restructuring will have on personnel staffing levels.

17. Is American Express continuing to receive payment from BETR on a weekly basis as it has in the past?  (Added May 26)

American Express will be paid on a regular (targeted weekly) basis as in the past. The charges are reviewed daily by the DIP committee before the payment is released. A payment should be released shortly for approved and submitted expense reports processed the week of April 27, 2009.

18. Will late charges assessed due to late submission of the BETR payment be reimbursed by the company?  (Added May 26)

The company is are currently working on a process to address the issue of late charges resulting from the recent payment schedule.

19. Should I continue to use my American Express Card for charges related to my approved business trips?  (Added May 26)

Yes, you should continue to operate “business as usual” and use your American Express card as you normally would for business travel.  It is recommended that you also carry an alternate form of payment when you travel, in case of any unforeseen circumstances.

20. If I used cash or my personal credit card on an approved business trip, will I be reimbursed within the same timeframe as in the past?  (Added May 26)

Yes, your cash payment or personal credit card charges will be reviewed and released by the DIP committee along with the other BETR payments.

21. What if I was issued reimbursement by the company and the check had bounced?  (Added May 26)

BETR will be receiving a file of all the payments that had bounced and need to be reissued. They will reissue the payments again when funds are made available. At this time, do not attempt to reprocess the returned checks that have previously bounced.

22. Will my credit score be affected if my account is assessed late charges due to the late BETR payment?  (Added May 26)

Probably not, since your personal credit score will not become affected related to your corporate card until the account goes 180 days past due. It is important, however, to expense your charges immediately after they pre-populate into BETR to try to minimize late payment and possible penalties that Chrysler may be required to pay related to supplier chargebacks on delinquent balances.

23. What if my Amex card gets “shut off” because the late BETR payment caused the account to age over 30 days past due?  (Added May 26)

Make sure you have created and submitted an expense report.  It should be able to be supported with this “promise to pay.”  Send an email to (as44) with your name, CID and a number to reach you at, and an attempt will be made to get the card turned back on.

24. Will my card get “turned off” due to a credit balance on the account?  (Added May 26)

The account will not be cancelled due to a credit balance.  This is the process to resolve credit balances: Credit balances are reviewed and decisioned by the expense reporting group accessed through the BETR Helpdesk (874-6000). The cardholder with a credit balance needs to call the BETR Helpdesk and request to open a trouble ticket to have a credit balance reviewed on their account.  The Helpdesk will ask the cardholder to provide proof of the payment (s) that led to the credit balance (cancelled check, computer payment). If the credit balance is deemed to belong to the cardholder, it will be issued back to them,  If it is deemed to belong to the company, it will be issued back to Chrysler. Proof of personal payment by the cardholder is required because in more than 90% of the cases where there is a credit balance on a cardholder account, it belongs to the company and was issued in the form of a supplier credit (cancelled airfare or hotel).

Compensation/Healthcare

25. What happens to my Retiree Health Care Account (RHCA)?

The RHCA is a qualified Voluntary Employees’ Beneficiary Association (VEBA), and your account assets are not subject to creditor claims.  Your account balance will be available for reimbursement of qualified health care expenses in retirement.

26. Will severance and benefits be provided to those who lose their jobs going forward?  

Under the proposed transaction with Fiat, severance benefits will initially be provided on terms that are no less than the severance benefits employees would have received under the current severance benefit plans. 

27. Will paychecks still be delivered in the same way?

Orders were entered on May 1 authorizing financial institutions to honor EFTs and paychecks for wages earned before the bankruptcy filing. Employees who have previously elected EFT via Dashboard should call their financial institutions directly to confirm availability of their funds.   Banking inquiry systems (on-line and 1-800 hotlines) update throughout the day,   If you receive paper checks there could be a one or two day period in which check   clearing is delayed. In addition, employees that have credit union deductions from their payroll payments may also experience a one or two day period in which these deductions may not be posted to their accounts.

For future pay elections, employees can continue to elect EFT via Dashboard to avoid any delays in pay, however, an EFT election today cannot take effect until at least 7 to 10 business days.  

First-day motions were filed to support Chrysler’s employees, dealers, vendors and suppliers, together with its customers and other stakeholders.  The Court granted approval for the company’s request to continue payment of wages and health and welfare benefits to employees and contractors, and continue its customer warranty programs.

28. If I’m laid off after the filing will I get a check for the period from my last paycheck immediately before filing through the time I was let go?  

Court approval will be sought to pay for this time worked.

29. Will my Workers Compensation benefits be paid? (Added May 7)

By decision of the bankruptcy court, Chrysler has authority to pay pre-petition workers compensation claims.

30. What is the status of our money in dependent care and health care savings programs – is it safe?

The funds in these plans are not subject to creditor claims and remain available for you under the terms of the applicable plans.

 31. Are any reductions to base pay anticipated as a result of the bankruptcy proceedings or restructuring with Fiat? (Added May 8)

It is premature to speculate on the impact that the restructuring will have on base pay.

32. Is the NBU disability plan still in effect (for those on disability currently or for those who will go on disability during the 30-60 days of bankruptcy)?  (Updated June 1)

The Disability Absence Plan and Long Term Disability (LTD) Plan are in effect.

33. If an employee is currently on a layoff status (laid off prior to 4/20/09), will they still receive IPP or SUB benefits?  (Added May 26)
No.  IPP benefits for these former employees have been terminated.

34. If a spouse is a AW retiree who is losing dental and vision benefits per the new contractual agreement, can their spouse who is a salaried employee now enroll both of them in salaried dental and vision benefits under a qualifying event?  (Added May 26)
Yes, this is a qualifying event to enroll in dental and vision coverage.

 

Retirement/401(k)

35. What happened to Daimler’s commitment to provide a $1 billion guarantee if the pension plans are terminated?

As announced on April 27, Daimler reached an agreement on its separation from Chrysler where it has agreed to pay $200 million into Chrysler’s pension plans on the date of the execution of a definitive agreement, and in each of the next two years, for a total contribution of $600 million.  The existing pension guarantee of $1 billion to the PBGC will be reduced to an amount of $200 million and remain in place until August 2012.

36. Are Chrysler’s pension plans protected from creditor claims in Bankruptcy proceedings?

Yes. Federal law protects the funds in qualified pension plans from creditor claims.

37. Will the Chrysler qualified pension plans be assumed by the new company?

Under the proposed transaction with Fiat, Chrysler’s qualified pension plans will be assumed by the new company. 

38. What happens if the defined benefit pension plans are terminated?

In the event a plan is terminated it will be administered by the Pension Benefit Guaranty Corporation, which is an independent agency chartered under federal law. For more information about the PBGC insurance protection and its limitations, you may visit www.pbgc.gov.

39. What will happen to the accounts of employees in the 401(k) plan?

The assets in all 401(k) plans are completely separate from Chrysler and are held in a trust administered by Merrill Lynch. These funds are protected from the claims of the Company’s creditors.

40. Now that Chrysler has filed for bankruptcy can I withdraw my 401(k) assets in a lump sum?

Regular plan terms and IRS regulations still apply to all 401(k) distributions. Please contact a financial advisor for more information regarding your particular situation.

41. Are employees still responsible for any loan payments they have related to their 401(k) plans?

 Yes. At present, the normal terms of the plan remain in place.

42. May I continue to make deferral contributions and “catch-up” contributions (pre-tax contributions if age 50 or more), if applicable, to my 401(k) plan?

 Yes. If you continue in the employ of Chrysler, you will be allowed to continue to contribute to the 401(k) savings plan to the extent allowed by the plan and IRS regulations. 

43. Will I still be eligible to receive my 401(k) Company Match allocation? 

Amounts previously deposited into your 401(k) savings account under the Company Match program are vested and available for distribution in accordance with regular plan terms and IRS regulations. Please contact a financial advisor for more information regarding your particular situation.

44. Are there any non-vested assets in the 401(k)?  How are they affected?

No, all 401(k) funds vest immediately.

45. Am I still entitled to amounts contributed to the “New Hire” Employee Managed Retirement Plan)?

Yes, the Employee Managed Retirement Plan is a qualified pension plan whose assets are protected from creditor claims. Vested amounts are available to plan participants in accordance with plan provisions. For further information please contact Merrill Lynch at 1-800-483-7283 or via web at http://www.benefits.ml.com/

46. What is the process for applying for retirement?  Is Benefit Express prepared to answer questions from those contemplating retirement?  (Added May 26)

Participants may commence retirement on line via the “Your Benefit Resources” website. 

47. Going forward, how will pension and health care benefits associated with Special Early Retirements and Layoffs be affected?  (Added May 26)

Special Early retirements will be administered in accordance with provisions of the respective plan.

48. Is the pension supplement being eliminated?  (Added May 26)

The pension supplements will be provided to eligible participants in accordance with the provisions of the pension plans.

49. Are the employee contributions made to SERP (non-IC plan) at risk?  (Added May 26)

No. SERP is a qualified plan and employee contributions are invested in a qualified pension trust.  These assets are not subject to creditors in the event of bankruptcy.

50. If SERP contributions are at risk, can employees stop the contributions?  (Added May 26)

SERP contributions are placed in a trust fund and are not subject to creditors in the event of bankruptcy.  SERP contributions are voluntary and employees may discontinue contributing at any time.  Please be advised that discontinuing SERP contributions suspends participation in, and the accrual of service under, the SERP, both of which can have a significant impact on retirement benefits.

Supplemental Workers

51. How are contract workers affected?  Should they come to work?

Contract workers should come to work unless instructed to do otherwise.  For specific questions, contract workers should contact their contract firm.

Locations outside of the United States
 

52. How are expatriate employees impacted?

Expatriate employees should continue to report to work, as scheduled, unless they have been specifically notified not to do so by the company.

53. Will plants in Canada/Mexico/outside U.S. be impacted?

All plants will be idled.  However, our Canadian and Mexican subsidiaries did not file for bankruptcy.

 

Retirees

54. Are Chrysler’s pension plans protected from creditors’ claims in the bankruptcy proceedings?

Yes. Federal law protects the funds in qualified pension plans from creditor claims. 

55. Will anything happen to Chrysler pension plans as a result of the bankruptcy?

Chrysler’s pension plans are governed under the provisions of the Employee Retirement Income Security Act (ERISA). Under the proposed transaction with Fiat, Chrysler’s qualified pension plans will be assumed by New Chrysler. 

56. Will there be any impact on retiree medical benefits as a result of the bankruptcy filing?

While no immediate changes to retiree medical benefits have been made, benefits may change in the normal course of business and in accordance with bankruptcy laws as Chrysler reserves the right to amend, suspend or terminate all or any provisions of its employee benefit plans and programs.  As always, if any changes are planned in the future, there will be information provided at that time.

57. What happens if the defined benefit pension plans are terminated?

No decision has been made to terminate the defined benefit pension plans.  In the event a qualified plan is terminated, it will be administered by the Pension Benefit Guaranty Corporation, which is an independent agency chartered under federal law.  For more information about the PBGC insurance protections and its limitations, you may visit ww.pbgc.gov.

58. As a retiree, what will happen to my monthly PTD disability or survivor benefits?

While no immediate changes to your monthly PTD or survivor benefits have been made, benefits may change in the normal course of business as Chrysler reserves the right to amend, suspend or terminate all or any provisions of its employee benefit plans and programs.  As always, if any changes are planned in the future, there will be information provided at that time.

59. What will happen to the accounts of employees in the 401(k) plan?

The assets in all 401(k) plans are completely separate from Chrysler and are held in a trust administered by Merrill Lynch. These funds are protected from the claims of the Company’s creditors.

60. Now that the Company has filed for Bankruptcy, can I withdraw my 401(k)/Pension assets in a lump sum?

Regular plan terms and IRS regulation still apply to all distributions.  Please contact a financial advisor for more information regarding your particular situation.

61. Will I still be eligible to receive my 401(k) Company Match allocation?

Amounts previously deposited into your 401k savings account under the “Company Match” program are vested and available for distribution in accordance with regular plan terms and IRS regulations. Please contact a financial advisor for more information regarding your particular situation.

62. Am I still entitled to amounts contributed to the 401(k) retirement plan (Employee Managed Retirement Plan)?

Yes, the Employee Managed Retirement Plan is a qualified pension plan whose assets are protected from creditor claims. Vested amounts are available to plan participants in accordance with plan provisions. The vesting schedule remains and is not impacted by filing for chapter 11.  For further information please contact Merrill Lynch at 800-483-7283 or via Web at http://www.benefits.ml.com 

63. Are employees still responsible for any loan payments they have related to their 401(k) Plans?

 Yes.  At present, the normal terms of the plan remain in place.

64. I have been collecting layoff benefits.  Will that change?

For employees laid off prior to the filing date, the lay-off payments will stop as of the filing date.

65. Where should retirees go to get more information?

We will continue to provide updates as appropriate through our regular channels of communication.  In addition, please visit http://www.chryslerretirees.com/ for updates.

 66.  Will pension checks be delivered in the same way?

Retirees who have previously elected EFT should not be affected. Employees who have previously elected EFT via Benefit Express should call their financial institutions directly to confirm availability of their funds.   Banking inquiry systems (on-line and 1-800 hotlines) update throughout the day,   If you receive paper checks there could be a one or two day period in which check clearing is delayed.

For future pension elections, retirees can continue to elect EFT through Benefit Express.
 
First-day motions were filed to support Chrysler’s employees, dealers, vendors and suppliers, together with its customers and other stakeholders.  The Court granted approval for the company’s request to continue payment of wages and health and welfare benefits to employees and contractors, and continue its customer warranty programs.

67. How will payments through the Supplemental Executive Retirement Plan be affected?

Chrysler’s filing for entry into Chapter 11 bankruptcy protection does not change the status of its defined benefit pension plans and defined contribution plans, such as 401(k) plans.

Defined benefit plan and defined contribution plan benefits are protected by law from claims of Chrysler’s creditors.

The Pension Benefit Guaranty Corporation (PBGC) has confirmed that as the bankruptcy process unfolds, it will work with Chrysler to ensure continuation of the defined benefit pension plans. Benefits in the Company’s defined benefit pension plans are guaranteed up to the limits set by law. For more information about the PBGC guaranty, you can log-on to the PBGC website at www.PBGC.gov.

We are required by law to stop the payments of non-tax qualified SRP benefits. We are uncertain at this time whether the law will permit the Company to pay any portion of non-tax qualified SRP benefits in the future. We will continue to share updates with our employees and retirees on a regular basis.

68. In situations where a retiree’s pension payment has been reduced to less than the healthcare, lease car or life insurance monthly premium, how would the premium be paid?  (Added May 8)
Benefits Express would contact the retiree to arrange direct bill payment.

69. In situations where a retiree’s pension payment has been reduced to less than the healthcare, lease car or life insurance monthly premium, how would the premium be paid?  (Added May 26)

IPP benefits for these former employees has been terminated.

Company Cars

70. What should I do with my Chrysler Employee/Retiree Lease vehicle?

Regarding the Employee Lease (EL) program, your lease arrangement will continue for now.

As you may know, Chrysler has an agreement with a third party that owns certain vehicles that Chrysler employees and retirees drive as lease vehicles.  For now, Chrysler will continue to collect amounts owed under your lease from your pay, pension check or other method. In the near future, Chrysler or its representatives will work with the outside entities to craft an on-going solution.  As soon as possible, we will determine and communicate to you the appropriate next steps.

As has been previously communicated, the lease program had already been scheduled to end later this year.  In the meantime, you should be aware that Chrysler continues to offer very favorable terms for purchase of new vehicles under the Employee Advantage Plan (Dashboard Anywhere/Cars & Trucks channel).  Also, in cooperation with Chrysler, Met Life and the Sterling Insurance Agency offer competitive group insurance rates for auto and other coverage (Dashboard Anywhere/Pay & Benefits channel/Optional Insurance).

71. Can outstanding vouchers for vehicle purchase be used toward the purchase of an employee’s company lease vehicle? (Added May 8)

As previously communicated, the vehicle certificates are only good towards the purchase of a new vehicle, it does not apply to used vehicles.

72. What should I do if my company lease car needs tire or glass replacement? (Added May 21)

The national tire accounts are currently suspended.  Any company car participant needing tire replacement should purchase the tire and then submit for reimbursement.  (Note that reimbursements are currently on hold pending the court’s bankruptcy outcome.)  The Fenkell glass replacement process is currently operating without interruption.

73. Will outstanding vouchers for vehicle purchase at the end of the corporate lease still be honored?  (Added May 26)

Yes, the vehicle certificates are still good through the end of the year.

74. With the recent GMAC announcement, are there any plans to extend the Company Car lease program?  (Added May 26)

At this time, the Company Car Employee Lease Program is scheduled to sundown later this year as planned.

This entry was posted on Thursday, April 30th, 2009 at 4:54 PM EDT and is filed under Chrysler, Restructuring. You can follow any comments to this entry through the RSS 2.0 feed. Comments are currently closed.