May 13 (Bloomberg) -- Chrysler LLC, seeking to sell most of its assets out of bankruptcy to a new company run by Fiat SpA, won’t have to contend with a strike by the United Auto Workers until at least 2015.

The union’s contract with Auburn Hills, Michigan-based Chrysler, ratified April 29, will be extended past its Sept. 14, 2011, expiration until that date in 2015, with any changes handled by binding arbitration, according to court documents filed yesterday.

Labor stability in its U.S. operations would help the new company compete in a shrinking auto market. The UAW contract also trims costs by reducing health-care benefits, consolidating job classifications and tightening attendance rules. By removing the strike threat, the arbitration clause gives the union less leverage should it try to recoup what it gave up.

“This sets a precedent that says, ‘In the most troubled of times, we will forgo the right to strike to ensure the survival of the company,’” said Harley Shaiken, a labor affairs professor at the University of California at Berkeley. “It recognizes the reality that in two years, Chrysler will likely still be in rough waters.”

The Detroit-based union also agreed to accept a 55 percent stake in the new company to fulfill half of the automaker’s $10.6 billion liability to a union retiree health-care fund.

Roger Kerson, a UAW spokesman, wouldn’t immediately comment. Chrysler spokeswoman Shawn Morgan declined to comment.

The UAW conducted brief strikes after the expiration of its contracts in September 2007 at Chrysler and General Motors Corp. before reaching agreements.

Last year, UAW workers were on strike for three months at American Axle & Manufacturing Holdings Inc., a supplier of GM axles, while negotiating a new contract. That walkout forced GM to idle many of its plants for weeks, costing the automaker $1.8 billion for lost production and sales.

Headquarters Transfer

Chrysler’s agreement with Fiat also calls for the U.S. company to buy its headquarters building, transferring $225 million plus unpaid interest to a holding company owned by Cerberus Capital Management LP. That would let Cerberus pay a mortgage on the building.

Chrysler Holding LLC, which included both Chrysler LLC and Chrysler Financial, owns the building. Only Chrysler LLC is in bankruptcy, so the headquarters isn’t part of assets being sold through the court process.

The new company will only assume the mortgage, Morgan said. Peter Duda, a spokesman for New York-based Cerberus, declined to comment.

U.S. Loan

Chrysler also will shift $500 million of a $4.3 billion U.S. loan to the new company, according to separate court documents filed yesterday.

Federal officials have said they don’t expect to recover the bulk of the loans made to Chrysler before the automaker filed for court protection on April 30.

The government will hold 8 percent of the equity in the new company and $500 million in debt, according to sale agreements. The government loaned Chrysler $4 billion in January and waived a $300 million origination fee. When Chrysler entered court protection, the U.S. claimed $4.3 billion as a debt, covering the loan and the fee.

The case is: In re Chrysler LLC, 09-50002, U.S. Bankruptcy Court, Southern District of New York (Manhattan)

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

Last Updated: May 13, 2009 00:01 EDT