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Double Cross: US Government Declares "Old Chrysler" in Default
I consider the GM and Chrysler bankruptcies armed robbery by the US Government.Not content with looting secured bondholders of almost $5.6 billion, the US Treasury decides to take what little is left in "old Chrysler" so secured creditors will get none of the remaining $2 bllion in assets. Treasury sent the notice of default on Aug. 13, said old Chrysler, now known as Old Carco LLC, in a bankruptcy court filing today. The U.S. government lent Old Carco $3.34 billion to complete its bankruptcy, according to the filing. Old Carco said it was negotiating with Treasury to "address" the default. The best assets of the old company were sold to a group led by SpA. Old Carco has now reported an $11.8 billion loss on the Fiat sale, leading to a net loss of $10.2 billion in June, court records show. The company's private creditors, who lent Chrysler $6.9 billion and expected to get about $2 billion back from the Fiat sale, might get nothing if the Treasury demanded payment of its loans, said the lawyer for a group of creditors who tried to block the Fiat deal earlier this year. "Having stripped Chrysler's first lien lenders of $5 billion in connection with the sham sale of Chrysler's assets to a shell corporation, Treasury is now trying to make it difficult for the lenders to recover any of their losses from the scraps that were left behind," said Thomas Lauria, who represented the group, in an e-mail today. Anyone see this in the press until today? I sure didn't. As I said: armed robbery. It cannot be allowed to stand.
Posted by: badanov 2009-09-10 |
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