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.