Bankruptcy agreement could aid Kenosha plant

Mar 13, 2010 — Milwaukee Journal Sentinel

Thomas Content

Mar. 13, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- A federal bankruptcy judge in New York City this week approved an agreement that could aid the potential sale or reuse of the Kenosha engine factory that's slated to close later this year.

An agreement approved Thursday would permit Chrysler Group to move ahead with plans to keep open its factory in Sterling Heights, Mich.

The deal is a $20 million sale under which Chrysler, now owned and controlled by Fiat SpA, will pay $20 million to the estate of Chrysler -- the pieces of Chrysler that Fiat didn't buy last summer and remain in bankruptcy.

The Kenosha plant was left behind in the estate -- dubbed Old CarCo LLC -- because Chrysler was not interested in keeping the plant open to make engines after the current V-6 engines stop production this fall.

Under the Sterling Heights transaction, assets linked to Kenosha that did come out of bankruptcy would be moved back to Old CarCo. That includes the intellectual property and patents linked to the production and sale of the 2.7- and 3.5-liter engines now made at the Wisconsin factory.

The Kenosha licenses were included in the filing to aid the Chrysler estate "in bolstering the recoverable value, and promoting the efficient liquidation" of the factory, equipment and fixtures in the Kenosha plant.

Chrysler spokeswoman Jodi Tinson said she could not comment on the estate's plans for the disposition of the plant.

"Our plans for Kenosha have not changed," she said. "We still plan to close the plant at the end of the year."

Kenosha Mayor Keith Bosman said in a recent interview that there were no new developments regarding the possible reuse and sale of the factory. The city has expressed interest in funding environmental remediation at the plant to help with a possible sale of the plant.

The factory employs 550 people and makes engines for the Chrysler 300 and Sebring as well as the Dodge Avenger, Charger and Journey.

Newstex ID: KRTB-0130-42852523