Former Chrysler files liquidation plan; Treasury gets no distribution

By Caroline Salls

Pittsburgh, Dec. 15 - Old Carco LLC, formerly Chrysler LLC, filed its plan of liquidation and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

The company said the plan is based on the liquidation of the company's remaining assets, including collateral of the first-lien lenders and government debtor-in-possession lenders and the prosecution of an action against Daimler AG.

Liquidation proceeds and escrows created at the time of Chrysler's asset sale and funded by the U.S. and Canadian governments will be distributed to creditors.

According to the disclosure statement, the potential distribution for holders of general unsecured claims is contingent on a successful outcome in the lawsuit filed by the company's official committee of unsecured creditors against Daimler.

If a sufficient recovery is not achieved in the Daimler litigation, holders of general unsecured claims will receive no distributions.

Potential distributions to holders of general unsecured claims are also contingent on those creditors and holders of first-lien secured claims voting in favor of the plan.

In addition, Old Carco said $3.7 billion in Troubled Asset Relief Program (TARP) financing deficiency claims are general unsecured claims, but the U.S. Treasury will not receive any distribution on account of its claim under the plan.

As previously reported, the U.S. Treasury provided $4 billion in TARP loans to Chrysler in January 2009.

Creditor treatment

Treatment of creditors will include:

• Holders of priority claims will be paid in full in cash;

• Holders of first-lien secured claims will either receive cash from the net proceeds of the sale of first-lien collateral, or the first-lien collateral will be transferred to the collateral agent for the benefit of these claimants;

• Holders of TARP financing secured claims, pre-bankruptcy intercompany claims and equity interests of Old Carco will receive no distribution;

• Holders of other secured claims will either be paid in full in cash, retain their liens and receive net cash proceeds from the sale of the collateral securing the claims or receive the collateral securing the claim;

• Holders of general unsecured claims will receive a distribution of any proceeds from the Daimler litigation only if general unsecured creditors and first-lien creditors vote to accept the plan and only if the available net Daimler litigation proceeds exceed a $25 million minimum threshold.

If the general unsecured creditors and first-lien creditors vote to reject the plan, the general unsecured creditors will receive no distribution; and

• Subsidiary debtor equity interests will be reinstated.

Old Carco said the plan confirmation hearing is scheduled for March 16, and the company expects to emerge from bankruptcy by March 31.

The disclosure statement hearing is scheduled for Jan. 21.

Old Carco, 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.