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Court okays Chrysler payments to dealers and suppliers

by Bill Cawthon on

Judge Arthur Gonzales approved $4.6 billion in debtor-in-possession financing allowing Chrysler to pay its dealers and suppliers and to give Chrysler time to finalize its alliance with Fiat.

The U.S. Treasury will supply $4.1 billion of the funding with another $400 million coming from New York banks that already banks hold about $4 billion in Chrysler debt. The balance will be realized from the sale of inventory on hand at Mopar.

Chrysler will use $1.49 billion to pay suppliers for components delivered ahead of the automaker’s bankruptcy filing. That will cover the majority of the $1,71 billion currently owed. An additional $753 million will be used to pay for sales incentives owed to dealers for sales prior the filing.

A minority group of investors, accounting for about $3 billion in Chrysler debt, strongly opposed the decision claiming the company’s net worth would be diminished if the alliance fails to be sealed.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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