By Stephen Markley on December 16, 2009
The company Old Carco — better known as “Old Chrysler” — will not repay the initial $4 billion government loan it received from the Troubled Asset Relief Program in January, according to the reorganization plan filed in a New York bankruptcy court.
This means unsecured creditors will likely not recover their claims. The Creditors’ Committee has filed a lawsuit against former Chrysler owner Daimler AG and could receive payment if they win the lawsuit. Some secured lenders may receive full compensation for their outstanding $20.6 million.
The $4 billion loan was approved by the Bush administration and has nothing to do with the additional aid the new Chrysler Group received to get itself restarted in a partnership with Fiat. Old Carco holds only the bad assets not purchased by the Chrysler Group when it came out of bankruptcy in June.
This liquidation plan must be approved by creditors, so final payouts might not take place for a long time. Unsecured creditors will await the outcome of the Daimler lawsuit, which is valued in the neighborhood of $25 billion.
Chrysler Liquidation Plan Won’t Repay $4B Fed Loan (Detroit News)