Posted on 09/23/2009 8:04:04 AM PDT by greatplains
DETROIT — The old Chrysler — the automaker’s leftover assets that remain in bankruptcy court — lost $344 million in July, and the company continues negotiating with the U.S. Treasury over a new schedule for repaying $3.3 billion in loans that are technically in default.
The July loss, reported in a bankruptcy filing, was down sharply from a $10.2 billion loss reported for June. That large loss reflected the government-financed sale of the automaker’s most viable assets to Chrysler Group LLC.
That new Chrysler company is owned 20 percent by Fiat, 67.7 percent by the UAW’s Voluntary Employee Beneficiary Association and 12.3 percent by the governments of the U.S. and Canada.
In the transaction to create the new company, the U.S. Treasury paid $2 billion to Old Carco LLC, the name for the bankrupt pieces of the automaker.
The $3.3 billion owed to the Treasury Department represents the balance of a $3.8-billion note payable that the U.S. government extended to the old Chrysler in May to cover capital expenditures, warranty claims and other administrative expenses tied to the bankruptcy process. Treasury did direct $600 million of that note be paid to GMAC, which is the primary wholesale and retail lender for the new Chrysler and its dealers.
The balance of that note was due June 30. Old Chrysler has not been able to pay it. Treasury issued its notice of default Aug. 13.
A Treasury department spokeswoman declined to comment on negotiations over the default.
Old Carco is required by bankruptcy law to file monthly financial reports even though it is not engaged in any significant operations. Those reports are unaudited but reviewed by Ronald Kolka, Old Carco’s CEO.
The company, which owns eight factories or other sites that it licenses to Chrysler Group LLC, charges new Chrysler for the costs of operating those buildings. For July, however, Old Carco reported only $2 million of revenue. That figure could increase in coming months as Old Carco sells some of its assets.
Heh... “loans.”
My father-in-law, truck driver, hauls parts from a Chrysler distribution center in Detroit to Cincinnati. He was just informed they are shutting down the Detroit distribution center and that he will be out of a job in November. He’s very pro-union but ironically noted that the reason why the plant is being shut down is due to the piss poor lazy workers at the distribution plant. The parts will now come out of a different center in northern Ohio. It appears they are consolidating operations.
Chrysler is on borrowed time...
What a weird setup. Chyrsler is split in two: all the liabilities go to a company that has almost zero assetts. All the assetts are sold to Fiat for $1. The point of this is??
Presumably the CEO of OldCar Co. is a Obama quisling. Too bad. It would be fun to see him actually try to run OldCar Co. for the good of it’s shareholders and bondholders. From reading this it appears they own all the factories.
Perhaps they should stop letting Fiat use them, or raise their prices continually ... just thinking outside the box here.
That new Chrysler company is owned 20 percent by Fiat, 67.7 percent by the UAW’s Voluntary Employee Beneficiary Association and 12.3 percent by the governments of the U.S. and Canada. What could go wrong good by chrysler.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.