The requests for payment are a result of the bankruptcy of Getrag Transmission Manufacturing LLC, litigation between Getrag and Chrysler, and the apparent termination of the manufacturing facility project in Tipton County.
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The request for payment comes after several months of discussions of the City and County project team, which included the Tipton County Board of Commissioners, Tipton Mayor Dan Delph, former Tipton County Commissioner Tom Dolezal, Tipton Utilities Director, Dave Reep, and the county's legal and financial advisors.
"If Chrysler had fulfilled its obligation to inform Tipton County of the project's status, we would not have issued the bonds," said Dolezal.
Tipton County's request to Chrysler for the $4.5 million reimbursement and the return of $5.5 million in bonds has already been rejected. Officials received a rejection letter from Chrysler February 24.
"We are very disappointed and upset by Chrysler's rejection of our requests," said Jane Harper, Tipton County Commissioner. "We merely called for Chrysler to honor its obligation under the commitment agreement we all agreed to in 2007."
Construction on the 900,000-square-foot plant began in July 2007 on a 145-acre site at U.S. 31 and Indiana Highway 28. The plant was designed to produce energy-saving dual-clutch transmissions for Chrysler and would have created up to 1,400 jobs.
When the project was announced it was hailed as the greatest single investment ever to be made in Tipton County.
Legal troubles between Chrysler and Getrag began in October 2008 when Chrysler filed a lawsuit accusing Getrag and a U.S. subsidiary of breach of contract and fraudulent misrepresentation. Getrag Transmission Manufacturing LLC canceled the Tipton project and filed for bankruptcy protection in November, leaving the partially completed building at the gateway to the community.
In the early stages of the project a commitment agreement dated May 3, 2007, spelled out terms of the parties' relationship. Tipton County agreed to provide certain incentives to Getrag and Chrysler, and Chrysler and Getrag agreed to a number of obligations, including agreeing to notify Tipton County if the two automotive manufacturers were ever unable to reach complete agreement on the cooperative development of the project. If the two parties failed to reach complete agreement, Chrysler agreed to be responsible for reimbursing Tipton County for any and all third-party costs incurred in the project.
Before the public legal battles began, a bond purchase agreement was made September 15, 2008, for Getrag and Chrysler to each receive $5.5 million in bonds issued by Tipton County based on their expenditures for the project. Those bonds were issued September 16.
One day later, Chrysler advised Getrag that it would not provide the assurances that Getrag had requested to enable Getrag to obtain debt financing for the project, according to papers filed in the Getrag bankruptcy and the litigation between Chrysler and Getrag. Chrysler's refusal to provide the requested assurances caused Getrag to send a "Failure Notice" advising Chrysler that Getrag could not obtain the necessary financing.
Chrysler's court papers allege that Getrag should have obtained financing no later than June 2008 and that Getrag's failure to obtain the financing breached the parties' agreements.
Neither Chrysler nor Getrag advised Tipton County before the bonds were issued that the parties were not in complete agreement on project development, that the necessary financing had not been obtained or that critical aspects of their agreements were not fulfilled or finalized.
"Their own legal papers suggest that Chrysler was aware of the lack of a complete agreement well in advance of Tipton County issuing the bonds. In those papers, Chrysler alleges there was a breach by Getrag of the terms of the parties' agreements, but Chrysler failed to notify Tipton County of those circumstances," said Ken Ziegler, Tipton County Commissioner.
More than $44 million is owed to electrical, pipe fitting and mechanical contractors who worked on the project; 116 have filed liens against both Chrysler LLC and Getrag Transmission Manufacturing LLC. Several contractors are in danger of going out of business because of the unpaid bills.
Tipton County is a predominantly rural area with a population of about 16,000 people and an unemployment rate that had increased to 10 percent at the end of 2008.
In a February 26 response letter to Chrysler, the Tipton County Board of Commissioners said: "We find Chrysler's failure to honor its obligations to the County particularly disturbing given that Chrysler is asking the citizens of Tipton and the entire nation to place continued faith in Chrysler by providing it with additional hard-earned federal income tax dollars."
GETRAG-CHRYSLER TIPTON TRANSMISSION PLAN PROJECT TIMELINE
- February 2007: Getrag and DaimlerChrysler sign a memorandum of understanding to develop and produce dual-clutch transmissions for DCX operations in North America
- May 3, 2007: Commitment Agreement spells out terms among Tipton County, Getrag and Chrysler. Chrysler and Getrag agree to notify Tipton County if the parties are ever unable to reach complete agreement on the cooperative development of the project.
- June 13, 2007: Permit issued for foundation construction
- June 18, 2007: Official announcement that Tipton will be the site of a new $530 transmission plant to open in September 2009
- October 2007: Road improvements nearly complete
- December 21, 2007: Construction is suspended over the holidays, but does not resume pending negotiations between Chrysler and Getrag Transmission Manufacturing, LLC regarding pricing and volume of transmissions to be purchased by Chrysler
- February 25, 2008: Construction resumes
- September 15, 2008: Bond purchase agreement signed
- September 16, 2008: $11 million in bonds issued, $5.5 million to Chrysler and $5.5 million to Getrag
- September 17, 2008: Chrysler advises Getrag it will not provide assurances Getrag had requested to enable Getrag to obtain debt financing for the project
- October 7, 2008: Chrysler files lawsuit accusing Getrag and a U.S. subsidiary of breach of contract and fraudulent misrepresentation
- October 17, 2008: Talks between Chrysler and Getrag Transmission Manufacturing, LLC shut down after Chrysler rejects the financing structure Getrag secured to build the joint venture in Tipton
- October 30, 2008: Getrag Transmission Manufacturing LLC and its German affiliate file a counter suit against Chrysler to recover costs associated with the Tipton project and reimbursement of all expenses incurred by GTM LLC and its suppliers in connection with the project
- November 17, 2008: Getrag Transmission Manufacturing LLC files for bankruptcy protection
- February 12, 2009: Tipton County Board of Commissioners officially requests return of bonds and reimbursement from Chrysler
- February 24, 2009: Tipton County Board of Commissioners receives letter from Chrysler refusing County's request