So much for the auto companies paying US back

[greg334]

Chrysler's lawyers have convinced a judge in NY to move ahead with their liquidation plan. This was that 438 plan where they sell off things like equipment and property (they sold some land here in Detroit for $2000 and then the state is trying to make sure the new old Chrysler clean it up).

The article -

Old Chrysler Liquidation plan moves ahead

mentions this little tidbit;

The United Auto Workers owns a majority stake in Chrysler, but doesn't have voting rights control over the automaker. Fiat's CEO Sergio Marchionne is also running Chrysler. The U.S. Treasury is unlikely to recover most of the $4 billion in loaned to Chrysler LLC under the Bush administration.

​

It is interesting that we are sold how good this was and how we, the tax payers, will see a return on our investment.

Like GM, this will be another mess that we never see our tax money returned to us and our debts paid off in full. ​

 

[Poorboy]

That's Not Surprising at all! And it's a Safe bet that the Moron in Chief doesn't care Either because he just Used that Money to Pay Back the Unions for Their Support! But I Guess We'll See if he steps in on this!

 

[Shadowpanda]

Well that article doesnt mention the full scope of the situation. There is an additional 3 billion loaned by the Obama Administration thats also not being paid back. However, the Treasury dept (and thus us taxpayers) DO have an 8% equity stake in the new company. Thats no guarantee of anything, but it's not time to kiss the money goodbye either.

 

[chefdennis]

One thing to keep in mind...all of the money given to chysler, GM, and the Banks under tarp was money that the country DIDN'T HAVE....we took loads out to get it and then give it away...so any "payback" is to go to the repayment of those loads.....and any interest earned should go to defict reduction, not to the fed gov to spend on another entitlement program...

If any of us ran our households like this, we would never have to worry about paying any secured or unsecured loans...but we would certainly be in front of a judge...but, we ain't the gov......

 

[Shadowpanda]

One thing to keep in mind...all of the money given to chysler, GM, and the Banks under tarp was money that the country DIDN'T HAVE....we took loads out to get it and then give it away...so any "payback" is to go to the repayment of those loads.....and any interest earned should go to defict reduction, not to the fed gov to spend on another entitlement program...

If any of us ran our households like this, we would never have to worry about paying any secured or unsecured loans...but we would certainly be in front of a judge...but, we ain't the gov......

Perhaps I would have been more accurate to say that CHINA now has an 8% equity stake in Chrysler Group.

 

[greg334]

Actually that 8% is essentially being canceled by the debt being folded back into bankruptcy to be written off. With Fiat involved, there is a lot more with the breakdown of the investments and who gets what, as the UAW got a large portion of the company for really not one dime of investment, the tax payers essentially get nothing and I think it was design that way for both GM and Chrysler right form the get go.

GM plans on paying back one of something like 9 loans to avoid interest, but the interest payment was a loan in itself and that seems to be another freebe for them. Don't let anyone fool you, the people near the top have made millions off this entire deal, Henderson and even Lutz through different channels.

 

[chefdennis]

chysler / fiat may be able to cancel out the debt with the bk, but the american people are still on the hook to china and whoever else the fed got all of the bailout money from....we didn't take it from a "savings account" for a rainy day, the fed is broke, we borrowed the money and added it to our national debt.....so there is no "profit" on this so-called investment...even the interest pd needs to go to the debt....

 

[greg334]

Well the way it is working is like Kmart did with their bankruptcy, they screwed over a lot of people and should have been liquidated completely.

Chrysler figure out what assets they want to keep, form a new company and then shifted the assets over to the new company under an exchange of stock, in donig so they got the cash too. The exchange of stock is used to pay off the lenders or bond holders per judges orders, in this case it went to the biggest lender in the bunch to pay them off, 8% of stock in the new company for "we the people" and then old company is liquidated for what ever they get. The debt still sits on the books with a partial payoff with the 8% of the stock but the remainder of the debt is lost - there is $14B that was actually lent to this group, right now they are looking at $7B to be written off but that may just be the $4B mentioned in the article.

Fiat has zero to do with the old company, they are walking into the situation that is clean without the burden of the old debt or liquadation issues.

The latest BIG DEAL is coming from the UAW who is crying at the idea that Fiat will be importing more of the product line and moving some production out of the coutnry - Mexico and Asia. The company has to think about itself, not labor and because they got 51% of the stock when they didn't have an investment in the company, I say do what you have to do Fiat.

This bankruptcy thing also happened with GM but accelerated because of the administration's need to intervene in the courts to the point that GM came out of it great while screwing the long time stock holders, the bond holders and the consumer. Right now the union over in Belgium is going to fight the closure of the plant and it may be one of these EU things that GM will have no choice but to deal with not selling off Opel or have a complete loss in the entire EU market.