Old Carco (Read: Chrysler) will not repay $4B federal loan (New Poll)
A reorganization plan filed in bankruptcy court in New York Tuesday by the former Chrysler LLC, now known as Old Carco LLC, shows the automaker will not repay the $4 billion government loan it received in January.
Unsecured creditors also are unlikely to recover any of their claims, unless there is a successful outcome in a lawsuit against former Chrysler owner Daimler AG by the Creditors' Committee.
Some secured lenders could be fully compensated for their outstanding $20.6 million, court documents show.
The $4 billion was Chrysler's first government loan, approved by the Bush administration to come from the Troubled Asset Relief Program.
"I think the government's known for a while that money's not coming back," said Van Conway, president of Conway MacKenzie Inc., which specializes in bankruptcies and reorganizations.
Additional aid to create Chrysler Group LLC with partner Fiat SpA has the greater likelihood of being paid back, he said. Chrysler received about $15 billion in total aid.
Final determinations of payouts will take a long time, in part because they must wait for the outcome of the Daimler lawsuit valued at about $25 billion, documents show.
A separate Liquidation Trust was established by Old Carco to continue the lawsuit. Conway said resolution of that lawsuit could take years.
Old Carco contains "bad" assets not purchased by the new Chrysler Group when it emerged from bankruptcy June 10.
Among assets sold to date are a shuttered plant in Newark, Del., to the University of Delaware for $22.5 million and 5,000 company cars that netted about $91 million.
Attorneys for Old Carco have requested a hearing on the plan Jan. 21 and a confirmation hearing March 16.
The company had $2 billion to wind down operations. But use of that money ends March 31, and Old Carco wants the plan to take effect by then.
The liquidation plan must be voted on and approved by creditors. Voting is to be completed by March 2.
Separately on Monday, for the second time, the U.S. Supreme Court rejected an appeal of Chrysler's bankruptcy and the sale of its best assets to Fiat SpA.
Source: Old Carco (Read: Chrysler) will not repay $4B federal loan (New Poll)
Unsecured creditors also are unlikely to recover any of their claims, unless there is a successful outcome in a lawsuit against former Chrysler owner Daimler AG by the Creditors' Committee.
Some secured lenders could be fully compensated for their outstanding $20.6 million, court documents show.
The $4 billion was Chrysler's first government loan, approved by the Bush administration to come from the Troubled Asset Relief Program.
"I think the government's known for a while that money's not coming back," said Van Conway, president of Conway MacKenzie Inc., which specializes in bankruptcies and reorganizations.
Additional aid to create Chrysler Group LLC with partner Fiat SpA has the greater likelihood of being paid back, he said. Chrysler received about $15 billion in total aid.
Final determinations of payouts will take a long time, in part because they must wait for the outcome of the Daimler lawsuit valued at about $25 billion, documents show.
A separate Liquidation Trust was established by Old Carco to continue the lawsuit. Conway said resolution of that lawsuit could take years.
Old Carco contains "bad" assets not purchased by the new Chrysler Group when it emerged from bankruptcy June 10.
Among assets sold to date are a shuttered plant in Newark, Del., to the University of Delaware for $22.5 million and 5,000 company cars that netted about $91 million.
Attorneys for Old Carco have requested a hearing on the plan Jan. 21 and a confirmation hearing March 16.
The company had $2 billion to wind down operations. But use of that money ends March 31, and Old Carco wants the plan to take effect by then.
The liquidation plan must be voted on and approved by creditors. Voting is to be completed by March 2.
Separately on Monday, for the second time, the U.S. Supreme Court rejected an appeal of Chrysler's bankruptcy and the sale of its best assets to Fiat SpA.
Source: Old Carco (Read: Chrysler) will not repay $4B federal loan (New Poll)
