Posted On: May 15, 2009 by Steven J. Malman

Will Chrysler Bankruptcy Impact Workers’ Compensation Funds?

States throughout the country are observing Chrysler LLC’s bankruptcy proceedings to see how the case might affect workers’ compensation funds. Chrysler has promised to continue providing workers’ compensation benefits even though it filed for Chapter 11 bankruptcy.

Last week, Michigan Attorney General Mike Cox filed a motion in bankruptcy court expressing concern that some of the verbiage in Chrysler’s bankruptcy paperwork leaves room for the auto manufacturer to back out of its existing workers’ compensation commitments. One concern would be that if a buyer were to purchase Chrysler, that entity would not be obligated to keep paying the injured workers’ claims. Cox's motion expressed concern that if the state’s Self-Insurers Security Fund had to assume these obligations, the fund would become insolvent within weeks.

Michigan, where Chrysler has strong business roots, is not the only state that could be affected if this were to happen. Chrysler, which has employees throughout the US, is self-insured some states and has bought workers’ compensation insurance in others. As a matter of fact, an Illinois Workers’ Compensation spokesperson says it is observing the situation in Michigan and speaking with agencies in other states about the issue.

A Chrysler spokesperson says that the court has given the automaker authority to keep paying workers’ compensation to its injured workers that qualify for these benefits. As of the end of 2008, Chrysler had 38,257 workers in the US. The company’s workers’ compensation liability may exceed $150 million, requiring the company to put out over $25 million a year. Chrysler filed for Chapter 11 bankruptcy on April 30 and is in the process of combining its business with Fiat.

States watch Chrysler's possible impact on workers' comp, Automotive News, May 11, 2009

Michigan Objects to Chrysler-Fiat Deal Over Workers' Compensation Funds, Insurance Journal, May 7, 2009

Related Web Resources:
Chrysler files for bankruptcy, Money.CNN.com, May 1, 2009

Illinois Workers' Compensation Commission

To discuss your Illinois workers’ compensation claim, contact Chicago workers’ compensation lawyer Steve Malman for your free case evaluation.

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