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Old Chrysler's costs outstrip assets | detnews.com | The Detroit News


The portion of Chrysler LLC that remains in bankruptcy had costs of $10.2 billion in June, which is more than the amount the company was left with to cover the costs of liquidation.

The June operating report for Old Carco LLC, the name for the bankrupt pieces of the automaker, was filed with the New York bankruptcy court Friday. Chrysler LLC filed for bankruptcy April 30, and the choice assets were sold to a new entity, Chrysler Group LLC, which was formed in partnership with Fiat SpA on June 10.

Former Chief Financial Officer Ron Kolka was put in charge of winding down the assets of Old Carco, which contain seven assembly plants, almost 3,000 vehicles valued at $51 million and contracts with dealers and suppliers that were not transferred to the new Chrysler.

The $10.2 billion in costs accrued in June include $186 million in restructuring charges, and there was an $11.8 billion net loss from the Fiat transaction. Combined restructuring costs for May and June amount to almost $10 billion.

Old Carco continued to pay professional fees in June, including $15 million to financial consultants Capstone Advisory Group LLC; property and real estate taxes; and other costs such as insurance and utilities connected with plants being leased to new Chrysler until their slated closure dates. Payroll costs were $142 million for the month, and taxes on that were a further $58 million, including $1.8 million to Michigan.

On the revenue side, Old Carco brought in $4 million in June, bringing the total to date to $593 million. The company is working to sell or end leases on property, plants and equipment.

Old Carco was given $2 billion to cover expenses when the court approved the sale of assets to the Fiat-managed Chrysler that exited bankruptcy. Additionally, the U.S. and Canadian governments approved $4.96 billion in debtor-in-possession financing.

Old Carco has a net loss of $11.7 billion to date.

The unaudited financial report filed Friday lists total assets as of June 30 at $2.345 billion. But liabilities number $20.5 billion, leaving little optimism for unsecured creditors hoping to recoup some of their losses.

There is about $20 million in prepaid tooling that was not transferred to the new Chrysler, and Old Carco has determined the amount is not recoverable, according to the document.

Chrysler continues to support Old Carco by providing administrative services, including accounting, benefits, information technology, legal services, insurance, operations management, real estate, security, tax, finance and workers' compensation.



[source]


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