Lee Iacocca, credited with saving Chrysler from bankruptcy in the 1980s, is to lose a big chunk of his pension and a guaranteed life-long company car due to the US automaker’s bankruptcy filing two decades later.
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Chrysler CEO Robert Nardelli told a US bankruptcy court on Thursday that Iacocca’s pension would be among the obligations Chrysler would no longer have to pay if it gets bankruptcy court approval to sell itself to a ‘New Chrysler’ to be owned by its union, the US and Canadian governments and Fiat, Reuters reported.
Iacocca, the former chairman and CEO who revived Chrysler in the 1980s and appeared in car commercials, had participated in a supplemental executive retirement plan that was comprised of non-IRS qualified pension funds and subject to bankruptcy.
The claim is unsecured, and typically would be paid after secured creditors in a bankruptcy, but even secured creditors are not expected to get full recovery in a Chrysler bankruptcy that will see hundreds of dealerships shuttered and plants closed, Reuters said.
Chrysler has also written to former executives saying that as a result of its 30 April bankruptcy filing it will stop a programme that provided company cars to former executives and directors.
Iacocca and other senior executives who were part of the programme are being asked to return their cars to Chrysler or arrange to pay for them, according to the document.
Chrysler said it regretted the action “in light of the many contributions these individuals have made to Chrysler over the years” and that the ‘New Chrysler’ did not expect to reinstate the car programme.
