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Chrysler files reorganization plan with no repayment of TARP loan

December 16, 2009|Bloomberg News

Chrysler, now known as Old Carco, filed a reorganization plan that gives nothing back to the U.S. for its $4-billion loan under the Troubled Asset Relief Program while repaying some secured lenders in full.

The rough outline of a Chapter 11 plan, filed Tuesday in Bankruptcy Court in New York, said creditors classified as "other secured claims" of $20.6 million will get an estimated 100% recovery. The recovery for unsecured claims is "undetermined."

The plan winds down Chrysler's 25 units that remained in bankruptcy after the sale of its most valuable assets to Fiat, which was completed June 10. The company isn't operating any businesses, and the plan would liquidate all remaining assets.

"The TARP Financing Deficiency Claims of approximately $3.7 billion is a general unsecured claim; however, the U.S. Treasury will receive no recovery on account of such claim pursuant to the terms of the plan," a company filing said.

Treasury gave Chrysler a bridge loan of $4 billion in January. Of that, the U.S. now has a $3.7-billion claim, according to court documents.

In the sale process to Chrysler Group, the new company agreed to assume $500 million of the loan.

Recovery for unsecured creditors will come from any proceeds of litigation with Daimler AG. The company has identified about 25,000 claims worth about $25 billion, according to court documents.

GM to erase debt

The carmaker will repay U.S. loans by June 30. B4

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