As most of us in this part of the world know, Chrysler LLC has filed a petition under Chapter 11 of the Bankruptcy Code today. Chrysler and the US Treasury have announced that as part of the “first day motions” to be heard by the Southern District of New York Bankruptcy Court, Chrysler will seek the Court’s approval to continue to pay its suppliers in the ordinary course of business. If the motion is granted (and there is no reason to believe it will not be) suppliers can expect to see no interruption in payment of accounts receivable from Chrysler LLC. Many Chrysler suppliers were also recently invited to participate in the Automotive Supplier Support Program backed by the US Treasury. Although the Automotive Supplier Support Program leaves all discretion to the US Treasury as to whether a receivable will be purchased and eligible for payment, this offers some additional comfort to suppliers. We are familiar with both the Automotive Supplier Support Program and the procedural rules and issues faced by suppliers in light of Chrysler’s bankruptcy petition. For more information or assistance in connection with the Chrysler bankruptcy, please contact J.P. Murphy of our Detroit office.
