Chrysler LLC v. Plastech Engineered Products

Plastech Engineered Products (Plastech) (debtor) produced plastic car components for automobile manufacturers, including Chrysler LLC (creditor). Plastech typically entered into tooling agreements with its customers. Under these agreements, the customer would pay for and own the rights to the specialized tooling equipment necessary to produce the customer’s unique components. Chrysler and Plastech’s tooling agreement provided that Plastech did not have an interest in the tooling equipment Chrysler paid for; that Chrysler had the right to immediate possession of the tooling equipment on demand; and that, in the event of a dispute over whether tooling equipment was paid for, Chrysler could still take possession while the dispute was being resolved. Chrysler became aware that Plastech’s financial situation was deteriorating and eventually knew that Plastech had become insolvent. Chrysler sent a letter to Plastech terminating all contracts and demanding the return of all Chrysler tooling equipment. On the same day, Chrysler filed a suit against Plastech to obtain an order requiring Plastech to immediately deliver all of Chrysler’s tooling equipment. Later that day, Plastech filed for reorganization under chapter 11 of the bankruptcy code. The following day, Chrysler filed a motion to lift the automatic stay in order to remove the tooling equipment from Plastech’s facilities.