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Chrysler sues TRW for contract breach, asks for $1 million per day
By Caroline Salls
Pittsburgh, June 24 - Chrysler LLC and Chrysler Group LLC filed a lawsuit Wednesday against TRW Automotive Inc. in connection with an alleged breach of pre-bankruptcy supplier contracts assumed by Chrysler and assigned to the reorganized company. Chrysler also alleged violations of the court order approving its asset sale, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.
Chrysler said the sale order and related bidding procedures prohibit non-debtor counterparties to assigned contracts from refusing to perform under purchase orders and other agreements confirmed by New Chrysler.
Although TRW continues to claim that it has shipped automotive parts under some of the supply agreements in question, Chrysler said TRW has "refused to provide adequate assurance of future performance under the agreements unless TRW and New Chrysler agree to resolve a pending disagreement over cure costs."
Chrysler said this refusal violates the bidding procedures and sale approval orders.
"Without this court's intervention, New Chrysler cannot be assured that TRW will perform in the future," Chrysler said in the lawsuit.
"TRW's failure to provide would prevent New Chrysler from resuming production as planned on June 29, 2009 and irreparably harm New Chrysler."
Aside from asking the court to force TRW to continue to supply the parts and declare it in breach of the orders, Chrysler is asking the court to find TRW in contempt of the orders and impose sanctions of $1 million per day.
Chrysler, an Auburn Hills, Mich.-based automotive company, filed for bankruptcy on April 30. Its Chapter 11 case number is 09-50002.
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