Chrysler Creditors to Sue Daimler

A group of Chrysler creditors have asked the bankruptcy court approval to sue German manufacturer Daimler, who they accuse stripped the American manufacturer of its most valuable assets in 2007, when Daimler sold Chrysler to Cerberus Capital Management. The hearing of the creditors case will take place on August 13.

The creditor group seeks to be awarded $3 billion in compensation, more than the $2 billion paid to Chrysler's secured creditors. The money are said to cover unnamed assets transferred in 2007 as a result of the deal between Daimler and Cerberus.

Daimler on the other hand says the creditors' claim has no basis. "This is completely without merit and we intend to defend ourselves vigorously," Daimler spokesman Han Tjan was quoted as saying by Autonews.

The American manufacturer was part of the German Daimler Group in between 1998 and 2007. In May 2007, the Germans sold 80.1 percent of their Chrysler stake to Cerberus Capital and continued to hold a 19.9 percent stake. The remaining stake was given away this year, also to Cerberus Capital. As a result of Chrysler's filing for bankruptcy on April 30, Daimler gave up its remaining stake and paid an extra $600 million in Chrysler's pension fund.

After its exit for bankruptcy, Chrysler's stakes were divided between Fiat and the US government. Fiat and Chrysler have formed a strategic alliance that is believed to help the Detroit-based manufacturer survive in this current difficult economic environment. Additionally, Fiat would take a stake in Chrysler and will use the company's dealership network to expand its coverage in the United States.