Pension Benefit Guaranty Corporation 

80-3 

March 19, 1980 

REFERENCE: 

208 Mergers, Consolidations and other Transfers of Plan Assets

414(l). (IRC) Definitions and Special Rules. Mergers, Consolidations and other Transfers of Plan Assets

4043(b)(8) Reportable Events. Mergers, Consolidations & other Transfers of Plan Assets

4062 Liability of Employer in Single Employer Plans 

OPINION: 

 This is in response to your request for an opinion with respect to the liability of Chrysler Financial Corporation

("CFC") under Title IV of the Employee Retirement Income Security Act ("ERISA") after the occurrence of the

following transaction. 

You have advised that CFC is a wholly-owned subsidiary of Chrysler Corporation ("Chrysler"). CFC employees

presently participate in the Chrysler Corporation Salaried Employees' Retirement Plan and the Chrysler Corporation

Pension Plan (hereinafter referred to as the "Plans"). The Plans are defined benefit plans subject to the termination

insurance provisions of Title TV of ERISA. 

As of December 31, 1979, CFC participants constituted less than five percent of the total number of participants in

the Plans. (The number of CFC employees participating in each of he Plans has always [*2] been less than 20 percent

of the total number of participants in each such Plan.) 

The Plans are structured so that, in the event of a plan termination, all assets of the terminated plan would be

available to provide benefits for all participants in that Plan, without distinction as to employer. 

It is contemplated that a proportionate share of assets of each Plan applicable to CFC employees will be transferred,

in conformity with Section 208 of ERISA and Section 414(1) of the Internal Revenue Code, to new plans to be

established by CFC solely for its active and former employees. 

Pursuant to the Chrysler Corporation Loan Guarantee Act of 1979, Chrysler is eligible for federal loan guarantees

in an amount not to exceed $1,500,000,000. As a condition of qualifying for such guarantees, Chrysler is required to

raise at least $1,430,000,000 of non-guaranteed funds, including at least $300,000,000 from the disposition of assets.

As part of its overall plan to qualify for such guarantees, Chrysler proposes to sell 51 percent of the outstanding shares

of CFC to certain institutional investors and finance corporations (some of which may be creditors of Chrysler, CFC,

or both, but all of [*3] which are independent of Chrysler). Chrysler represents that the shares will be sold for their fair

market value and, accordingly, Chrysler will be in receipt of consideration equivalent to the value of the CFC shares

which are sold. 

Immediately following the sale, it is expected that CFC will be recapitalized to exchange the shares held by the new

investors for new preferred voting shares of CFC, under which the new investors will retain voting control of CFC.

Ultimately, it is hoped that at least two other automobile manufacturers will buy additional shares of CFC. 

Based upon the foregoing representations, PBGC finds that CFC would have no liability under Title IV of ERISA

to the Pension Benefit Guaranty Corporation ("PBGC" ) in the event of the subsequent termination of either or both of

the Plans. Of course, CFC would have potential Title IV liability in connection with the new plans it may establish for

its own active and former employees. PBGC's determination is based upon the representations in your letter of March

3, 1980 concerning this transaction. 

Robert E. Nagle 

Executive Director