Chrysler LLC has announced that it will begin the process of assuming and assigning the overwhelming majority of the company’s supplier contracts to the new company established in a global alliance with Fiat SpA once a sale is complete. In connection with this announcement, Chrysler has instituted a process pursuant to which suppliers may be paid on account of pre-bankruptcy accounts receivable.

As part of these efforts, Chrysler will mail letters to approximately 1,200 of its suppliers setting forth the amounts that Chrysler has determined will be required to "cure" all contracts to be assumed and assigned. These letters also provide details of the process by which suppliers can begin receiving payment of such amounts. Completing this process quickly is an important step in Chrysler’s preparations to restart operations, and provides suppliers with a fast and efficient way to ensure payment of pre-petition claims and to continue their business relationship with the new company moving forward.

“This is very good news for suppliers and Chrysler,” said Scott Garberding, Senior Vice President and Chief Procurement Officer – Chrysler LLC. “I know there was great anxiety in the supplier community when we announced Chrysler’s Chapter 11 filing. This should be a great relief. The terms are fair and far better than the treatment trade creditors usually get in a bankruptcy case, and provide a mechanism for quick resolution of all open issues.”

An initial list of suppliers being asked to go forward with the new company is included in court documents filed today (May 15) in the U.S. Bankruptcy Court for the Southern District of New York. The list is not a complete or final listing of suppliers for the new company, and Chrysler will continue to work with those suppliers who wish to become part of the new enterprise. “Our supplier partners will be critical to the success of the new Chrysler that emerges from Chapter 11,” added Garberding. “We are asking our suppliers to move quickly to become part of the vibrant new company that will emerge from the Chrysler–Fiat alliance.”