It's (Mostly) Official: $4 Billion of Chrysler TARP Loans a Writeoff
December 16, 2009
The Chapter 11 bankruptcy reorganization plan filed Tuesday by the company comprised of 
the remnants of the former Chrysler, Old Carco LLC, effectively leaves the U.S. taxpayer on the hook for about $4 billion loaned to the company through the U.S. Department of Treasury's infamous Troubled Assets Relief Program, Reuters reported.
The plan accounts for no payback of the $4 billion "bridge" loan to Chrysler made through TARP in January, prior to its summer bankruptcy, although secured creditors accounting for a mere $20.6 million of the billions in debt the company left behind will be paid in full.
Old Carco is comprised of 25 unwanted assets and a structure the now Chrysler Group LLC left behind to deal with the remaining creditors making claims against those assets. Old Carco is not operating any of the businesses it owns and the reorganization plan is designed to liquidate all of the company's remaining assets, the wire service said.
Lawyers said about $3.7 billion of the TARP loan is classified as an unsecured debt assigned to Old Carco and because the company has nothing approaching the asset value required to repay, the reorganization plan makes no provision for repaying the TARP debt.
Any payments to the former Chrysler's unsecured creditors would have to come from litigation with former Chrysler owner Daimler AG.
A hearing to approve the outline of the Chapter 11 reorganization is scheduled for January 21, 2010, Reuters reported, and a confirmation hearing is slated for March 16.
Meantime, on Tuesday, GM Chairman and Interim CEO Ed Whitacre said the automaker intended to pay off its $6.9 billion in TARP loans by June 2010.
Posted by Michelle Krebs at 4:07 AM under Chrysler , News | Comments (4) | digg this | Seed Newsvine
So if the value of the assets of Old Carco aren't enough to cover the TARP loan, and likely never were,
why was the loan extended knowing at the outset it was lost?
That is our money.
The US Government, as an unsecured creditor and accountable to its citizens, must exercise due diligence and sue Daimler AG for the money.
Marchionne may want to push for this; this isn't good PR.
Posted by: fulcrumb | December 16, 2009 at 10:01 AM
Who'da thought!? From a government that mandated ChryCo to file bankruptcy to start with and then force a merger with a foreign company (literally for free) just to receive any more bailout funds. (and do this prior to GM of course just to test the waters - just in case the 'surgical' bankruptcy thing didn't work then we just lost Chrysler, nobody like them anyway, it's just a couple hundred thousand workers) then they allow the previous owner (Cerberus) to literally WALK AWAY with the $11 billion in Chrysler Financial's vaults while the taxpayers bail out the rest of the auto company (ever wonder why we didn't hear JACK about the agreements made with Cerberus in the news? It's a good 'ole boys club and Cerberus is with the IN crowd! Most folks wouldn't even be able to tell you WHO the owner used to be, that's how quiet everything was!). The $11 billion in ChryFi was the whole reason for the discussion about a GM/Chrysler merger, but that was taken off the cards very quickly when they found out they could keep ChyFi AND the money just to leave! Then the govt overrules every state franchise law in the country and allows dealers to be wiped away at will. Then during the bankruptcy they split the all the bad ownership and debts to a different company called OldCarCo; so we have here a company literally designed by govt to be a loser with literally no chance to make money (except the longshot lawsuit against Daimler-which is also fixed from the start), who'da thunk they wouldn't pay it back? Geniuses they are! Taxpayers be darned.
But then again, why fixate on "only" $4 billion like the govt and media want us to? Let's just say <$50 billion to GM/Chrysler bailouts, we're looking at what they WANT us to, not at the $780 billion bank bailouts, spendulus' or whatever else, just keep looking here everybody...this is a problem with our automakers. This is why we know all the details of the auto bailouts, it's in the news every day with all the details spelled out, but we find next to nothing to account for where all the BIG money goes, it's a slight of hand trick!! And 90%+ of the peopel fall right into it, automakers are water cooler issues, but who's still talking about the bank bailout funds or stimulus funds?
I agree totally it was a waste, and Marchionne prob will ignore it (remember he got the whole company for FREE), but he SHOULD do something for image reasons especially after GM announced a week ago that they might start paying back earlier than thought (publicity stunt if you ask me - the govt owns GM, then announces GM is paying the govt and it's supposed to be impressive?). But there's an even bigger picture, this isn't even a DROP in the govt wasting bucket right now! At $50b, the entire automaker bailouts for GM and Chrysler are literally 6.4% of the money just for the bank bailouts! THAT is far scarier to me!
Posted by: vmx12 | December 17, 2009 at 8:12 AM
I hate this government. People bought into the whole "time for a change" bullshit, and this is what we get. Change, that's for sure. Bush was right by letting it take its own course.
Posted by: greenpony | December 18, 2009 at 6:47 PM
Uh... What? This is about TARP funding, not the auto loans done for the big three. Last I looked Bush was the one that setup the TARP program, to send billions to his friends in the banking industry. Way to blame the current administration for something done before they were in office...
Posted by: liberal_media | January 14, 2010 at 1:10 PM