Judge approves liquidation of Old Carco; U.S., Canadian governments to receive almost nothing
Wednesday, April 21st, 2010
After nearly a year under bankruptcy protection, U.S. Bankruptcy Judge Arthur Gonzalez has ruled that Old Carco LLC – the bankrupt entity of Chrysler Group – can move forward with Chapter 11 liquidation. The decision almost guarantees that the U.S. will recoup little – if any – of its Chrysler bailout loans.
The ruling was fittingly handed down on Tuesday – the same day General Motors fully repaid U.S. and Canadian bailout loans. Old Carco’s wind-down process will become effective of April 30.
Per the terms of the wind-down plan, creditors with “other secured claims” are expected to receive the full $20.6 million they are owed. Unsecured creditors will receive any funds gained from a pending lawsuit against Daimler, but that total has been labeled as “undetermined.”
The U.S. government, meanwhile, is expected to recoup very little of its $5 billion investment in the Michigan automaker. U.S. and Canadian will only receive money from liquidated assets, such as the sale of employee cars.
In all, U.S. taxpayers are expected to lose about $30.4 billion on the bailouts of Chrysler and General Motors.