Chrysler assets left behind lost $10B in June

[Robbien]

Source: Detroit Free Press

The parts of Chrysler LLC that remain in bankruptcy court lost $10.2 billion in June alone, according to an unaudited financial statement filed in U.S. Bankruptcy Court in New York.

When the most attractive assets of the automaker were sold June 10 to a new company, that entity came out of bankruptcy. But seven plants that New Chrysler’s new partner Fiat rejected remained in bankruptcy court, along with their liabilities such as employees’ wages, the factories’ federal, state and local taxes, and certain pension and restructuring liabilities.

Those costs far exceeded the $2 billion in taxpayer assistance paid to Old CarCo LLC, when the new company came out of bankruptcy.

For example, Old CarCo paid $141.6 million in wages and $47.1 million in payroll taxes. For the month of June, it also paid $55 million in federal income taxes, and another $1.8 million to Michigan and $1.2 million to Ohio. Old CarCo also paid $15 million to Capstone Advisory Group LLC, a valuation consultant that has worked with Chrysler since last November.

But the largest cost by far was $9.9 billion in “reorganization items.” That reflected how much more valuable the assets given to the new company were than the $2 billion in taxpayer money Old CarCo received at the closing.

Read more: http://www.freep.com/article/20090904/BUSINESS01/90904020/1319/Chrysler-assets-left-behind-lost--10B-in-June

[Hugin]

1. The 'good bank' 'bad bank' strategy always works out like this...

It's the centerpiece of privatizing assets and socializing liabilities.


"But seven plants that New Chrysler’s new partner Fiat rejected remained in bankruptcy court, along with their liabilities such as employees’ wages, the factories’ federal, state and local taxes, and certain pension and restructuring liabilities."

Looks really good on paper... Especially if you're the one getting the 'good bank'.

[Hugin]

2. K&R

[No Elephants]

3. Ain't subsidized "capitalism" great? They got our money twice, once when we invested our private

funds and again when the taxpayer funded goverment rescued them. Meanwhile, Chapter X of the Bankruptcy Act, put in place after the Great Depression to investigate possible wrongdoing on the part of the bankrupt company and its executives was abolished.

Nothing to see in corporate bankruptcies. Nothing wrong with companies getting too big to fail. No sense holding anyone accountable for anything corporate. Move along now.

[leveymg]

4. Looks more like that $10 billion was written off and went into someone's pocket

The disappeared assets appear to have been grossly overvalued by the previous owners to cover real assets that were stripped off and walked out the door in someone's pocket before brankruptcy was declared.

Kind of a shell game.