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U.S. to Get Little Money Back in Old Chrysler Liquidation

April 21, 2010
2 min to read


NEW YORK - Chrysler LLC, the 85-year-old carmaker still partially in bankruptcy as Old Carco LLC, won approval to liquidate under a plan that may repay the U.S. almost nothing for its bailout and lets unsecured creditors keep any proceeds from a pending lawsuit against Daimler AG, Bloomberg reported. U.S. Bankruptcy Judge Arthur Gonzalez in Manhattan Tuesday approved Old Carco's Chapter 11 liquidation, which resolves all remaining objections in the case that began on April 30, 2009. The day it filed, Chrysler agreed that Fiat S.p.A. would pay $2 billion for a stake in the company while Chrysler kept the remnants, including $27 billion of debt, in bankruptcy. A federal appeals court in Manhattan upheld the sale. “The relevant confirmation standards have been satisfied, therefore the court confirms the plan,” Gonzalez said. About 98 percent of creditors had voted in favor of the plan, and 19 outstanding objections were resolved or overruled during a Tuesday hearing that lasted almost four hours. The company's wind-down plan will become effective April 30. “In 10 days it will be the anniversary of the filing,” Jeffrey Ellman, a Chrysler attorney, told Gonzalez, saying it was difficult to reach consensus on a wind-down plan for such a large company. He also spoke of the “extraordinary circumstances in which the bankruptcy was filed, for the company, the economy, and the country.” “Extensive amounts of time have been spent to develop funding for the liquidation plan,” he added. Ellman said at a Jan. 21 hearing that a key issue was whether the company would have enough money to liquidate its remaining assets, given the U.S. had allotted only $260 million for wind-down costs.

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