Attorney General Mike Cox filed papers with the U.S. Bankruptcy Court handling the Chrysler bankruptcy on behalf of the state’s Workers’ Compensation Agency and Funds Administration. The state is objecting to a provision in Chrysler’s proposed bankruptcy that would allow the company to avoid paying its obligations to the worker’s compensation fund. The Detroit News reports:
A state of Michigan agency today objected to Chrysler LLC’s proposed sale, warning that the state workers compensation fund could be forced to assume the automaker’s obligation of more than $140 million — a move that would bankrupt the fund.
“It is estimated that (Chrysler)’s total workers compensation obligations may exceed $140 million to $150 million with yearly payment obligations of over $25 million,” said the motion, filed by Michigan Attorney General Mike Cox on behalf of the State of Michigan Workers’ Compensation Agency and Funds Administration…
“The agency and funds have no desire to delay the proposed sale,” the motion said. But Michigan needs “to ensure that (Chrysler)’s injured workers have a continued source of payment to compensate them for their injuries.”
That threatens not just Chrysler employees but all employees in Michigan covered by self-insured plans. Like many large companies, Chrysler is self-insured for workers’ compensation claims.
“The concern about a source for payment of benefits applies not only to (Chrysler)’s injured employees but to all employees in Michigan entitled to benefits from an insolvent self-insured employer,” Cox’s motion said.
“If the proposed sale order is approved and (Chrysler) is unable or unwilling to continue paying their workers’ compensation obligations, the Self-Insurers’ Security Fund would eventually become insolvent, leaving all eligible injured workers of Michigan self-insured employers without a source of benefits.”
It will be up to the judge in the case to rule on which obligations the company must continue to meet after the restructuring period ends.