WASHINGTON (AP) -- The Labor Department said Friday it was seeking an exemption to facilitate Chrysler's move under bankruptcy proceedings to transfer company securities into a new retiree health care trust.
To help Chrysler Group LLC carry out its plan, the department is seeking an exemption from provisions of a federal law prohibiting such benefit plans from holding large assets in the form of employer securities. The health care trust would cover 120,000 Chrysler retirees and dependents.
Under the bankruptcy arrangement, the United Auto Workers union is getting a 55 percent stake in the new Chrysler, which will be used to fund its retiree health care obligations.
The proposed exemption would implement Chrysler's plan to transfer a $4.59 billion promissory note and company securities into the health trust.
Italy's Fiat Group SpA took control of the Auburn Hills, Mich.-based automaker after it emerged from bankruptcy protection in June. Fiat was given a 20 percent stake in Chrysler by the U.S. government, with an opportunity to take on 35 percent.
Chrysler did not immediately comment on the government request, which was expected. Labor Department officials filed a similar request last month for General Motors Co., which also went through a government-led bankruptcy last summer.
The plan includes the creation of a board to oversee the trust, set policies and select managers to make investments and oversee the health care funds.
Under the bankruptcy, the UAW's stake in the company will come in the form of a voluntary employees beneficiary association, or VEBA, that was set up to pay for the health care costs.
The company's total health care obligation was estimated at about $10.9 billion, plus additional costs for current workers who eventually will retire. The UAW has said it will need to sell off its majority stake in the automaker to fund the payouts.