The United Auto Workers union and Chrysler LLC are negotiating an agreement over VEBA ? a healthcare trust created to cover around 125,000 employee's benefits through retirement. The fund was taken over by the union in 2007, but Chrysler is obligated to contribute $10.6 billion to the trust in 2010. Talks between the parties center on renegotiating this contribution. Ford and GM both requested to cut their cash contributions in half, substituting equity for the rest; Chrysler may follow suit, requesting part of the obligation be paid in equity. The UAW and Chrysler hope to reach an agreement this week, well in advance of the April 30 deadline set by the Obama administration. The company must significantly reduce its debt by that time, or file for bankruptcy.
See "Chrysler-UAW Talks on Union Health Fund Gain Urgency", Mike Ramsey and Jeff Green, Bloomberg News, April 8, 2009