Former Chrysler seeks access to cash, outlines wind-down agreement

By Caroline Salls

Pittsburgh, Nov. 5 - Old Carco LLC, formerly Chrysler LLC, requested court approval to use cash collateral to liquidate its first-lien collateral and approval of the proposed funding for the wind-down of its business, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Old Carco said its access to cash collateral under its debtor-in-possession financing order expired on July 3.

According to the motion, the company was previously given approval to use $260 million of the DIP financing in furtherance of its wind-down efforts.

As a result, $113 million in wind-down funds were deposited in two designated accounts with KeyBank NA and JPMorgan Chase Bank NA to satisfy tax liabilities, and the $147 million of remaining funds have been held by KeyBank.

In addition to the wind-down funds, Old Carco said $42 million from the DIP financing was deposited in dedicated accounts at KeyBank.

With the approval of the DIP lenders, the company said it has used some of these $302 million in liquidation funds to pay the costs of administering their estates.

Since the closing of its asset sale, Old Carco said it has been in discussions with the key stakeholders in its bankruptcy cases to reach an agreement on the financing of the wind-down of its remaining assets and the completion of the Chapter 11 process.

In connection with these negotiations, the U.S. Treasury said the DIP lenders did not intend to fund the company's activities to preserve and liquidate its first-lien collateral.

As a result, Old Carco said it has negotiated the use of the first-lien lenders' cash collateral to fund the "preservation and liquidation of the first-lien collateral."

Old Carco said the U.S. Treasury has consented to the use of the liquidation funds to wind down the company's estates.

Wind-down agreement

Under the related wind-down agreement:

• Old Carco can use the liquidation funds by maintaining or funding trust accounts;

• None of the liquidation funds will be used to fund activities solely related to the liquidation of any of the first-lien collateral;

• The company will administer and liquidate the DIP collateral;

• The DIP lenders will be entitled to any liquidation funds remaining after the company funds the trust accounts, any net proceeds from the sale of any of the DIP collateral, any liquidation funds remaining after the liquidation trust has been fully administered and any liquidation funds remaining after the conversion or dismissal of Old Carco's bankruptcy case;

• A total of 80% of the net proceeds from the liquidation of company cars will be paid to the first-lien agent and 20% will be paid to the company; and

• The first $3.6 million of the remaining car proceeds share will be paid to the DIP Lenders to reimburse them for funding Daimler litigation costs, and the rest of the remaining share will be split, with 80% going to the DIP lenders and 20% to the company's unsecured creditors committee.

A hearing is scheduled for Nov. 19.

Chrysler, an Auburn Hills, Mich.-based automotive company, filed for bankruptcy on April 30, 2009. Its Chapter 11 case number is 09-50002.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.