Chrysler turned away by bankruptcy court in tax-refund quest

February 24, 2014 – twelve:34 am ET

NEW YORK (Bloomberg) — Chrysler Group could not get a New York bankruptcy court’;s support in its bid to recover an alleged $ 50 million overpayment of state unemployment insurance premiums.

Michigan, Illinois and Indiana base an employer’;s unemployment insurance taxes on the variety of claims the firm was responsible for causing in the 3 preceding years.

Chrysler has been controlled by Italy’;s Fiat S.p.A. given that its 2009 bankruptcy and Fiat gained total ownership of the U.S. automaker this yr.

When a buyer requires above a company, the successor is saddled with the so-named experience rating of the former owner.

Chrysler Group, or New Chrysler, asked a bankruptcy court to declare that the sale-approval purchase barred the states from making use of the so-named expertise rating of the old Chrysler, or Old Carco LLC.

New Chrysler mentioned the sale buy did not make it a successor.

The buy also allegedly gave New Chrysler the organization “totally free and clear” of such claims.

U.S. Bankruptcy Judge Stuart Bernstein never reached the question of what the tax rate need to be.

In an viewpoint last week, he stated the federal Tax Injunction Act deprived him of the authority to choose the dispute.

That statute bars a federal court from avoiding the assortment of state taxes so long as there is a “speedy and effective” state-court process to challenge the levy, the judge stated.

Bernstein parted techniques with 2 bankruptcy judges who have explained the act did not preclude them from interpreting their own prior orders.

Soon after filing under Chapter eleven in April thirty, 2009, Outdated Chrysler offered the company in June 2009, making New Chrysler. Previous Chrysler confirmed a liquidating Chapter eleven plan in April 2010.

The bankruptcy petition listed assets of $ 39.3 billion and debt totaling $ 55.2 billion.

The plan gave fifty 5 percent ownership of New Chrysler to a UAW believe in to offer wellness benefits for Chrysler workers.

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