Old Chrysler defaults on government loans

Old Carco LLC defaulted on $3.34 billion in debtor-in-possession financing from the U.S. and Canadian governments in June. The company also missed a $29 million interest payment on the loan.

According to documents filed yesterday, the remnants of Chrysler that remained in bankruptcy had costs of $10.2 billion in June, more than the total assets with which the company was left to cover the costs of its liquidation.

The failure to make the payments due on June 30 caused the U.S. Treasury to send a notice of default to Old Carco on Aug. 13: the notice was reported in court documents filed yesterday. The notice means Old Carco LLC can no longer borrow against the roughly $1.5 billion remaining in the loan fund.

Old Carco continued to pay property and real estate taxes and other costs associated with the plants being leased to new Chrysler until their slated closure. Payroll costs were $142 million for June, and taxes on that were $58 million, including $1.8 million to Michigan. Old Carco also paid professional fees in June, including $15 million to financial consultants Capstone Advisory Group LLC.

Old Carco filed an unaudited financial report yesterday listing total assets of $2.345 billion and liabilities of $20.5 billion of of June 30 meaning Chrysler LLC’s many unsecured creditors have little hope of receiving any significant settlement.