May 19, 2009

Collision course: the potential impact of Chrysler's bankruptcy & sale on state workers' comp systems

Roberto Ceniceros of Business Insurance has been tracking the potential impact that a Chrysler bankruptcy and sale could have on state workers comp systems. In a story last week, he reports that Michigan Attorney General Mike Cox has taken legal action to protect the state. Cox stated that Michigan's Self-Insurers' Security Fund could face insolvency as a result of Chrysler's bankruptcy and sale.

Now, Ohio state officials are raising concerns about how the Chrysler sale could affect Ohio's workers comp system. This week, Ohio's Attorney General Richard Cordray has filed a "limited objection" to the pending sale. "While Chrysler's bankruptcy filings show the automaker is committed to fulfilling its workers comp obligations, the filings do not hold a new owner to the same conditions, the attorney general said." According to a news report in Columbus Business First, there are about 5,000 Chrysler workers in the state.

It is likely that this issue is on the radar screen for other stat attorneys general, too. Ceniceros states that, "As of Dec. 31, Chrysler had 38,257 U.S. employees. It purchases workers comp insurance in some states while self-insuring in others, according to various state regulator databases."

And beyond Chrysler, there is the matter of whether General Motors is another likely candidate for bankruptcy - many expect this to be the case - see key dates in GM run-up to bankruptcy deadline. GM is a much larger company so problems could be multiplied, a matter that we discussed in our December posting about Maryland officials monitoring GM solvency related to workers comp.

For more on the way bankruptcy works for both insured and self-insured entities, see our postings of Robert Auerbach's three-part series on bankruptcy and workers compensation, part 2, part 3.

| 3 Comments

3 Comments

Reports indicate that 55% of the company would now be owned by the UAW and 8% by the federal government - so how would that scenario impact the WC Programs in these states going forward - if at all?

You'd THINK that, by now Congress would have "got it" that some attention to the bankruptcy issue would be important. You'd also think that the UAW and Organized Labor in general would have an interest. So far, getting their collective attention to the proposed reforms has been...daunting. Anybody have any suggestions?
Robert Aurbach

You would think the UAW and Organized Labor in general would have an interest.

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This page contains a single entry by Julie Ferguson published on May 19, 2009 11:41 AM.

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