Largest ever write-off of a loan
In 2009, the North-American auto industry was in dire straights.
Chrysler was planning to shut down its Canadian operation with thousands of jobs of workers and suppliers.
The federal government offered $1.1 U.S billion dollar loan to keep the automaker afloat, which it the end it did, sort of.
During the crisis, the automaker split into what is being called “old Chrysler” and “new Chrysler”.
A Jeep vehicle, one of the divisions owned by Fiat Chrysler drives in front of the Chrysler plant in Brampton, near Toronto. A huge government loan to Chrysler has been written off by the Liberal government (via CBC Marketplace)
Old Chrysler went into bankruptcy while the new firm, now known as Fiat-Chrysler went on to become successful posting a profit of almost $5 billion U.S. last year.
A second separate loan to the new entity of $1.7 billion was repaid to the governments of Canada and Ontario in 2011.
Because the loan was made to the doomed split off entity- old Chrysler- the loan was never repaid. In 2011, media generally misunderstood the situation and presumed that when the new entity paid back its particular loan, mistakenly reported that all the Chrysler loans had been repaid, now clearly not the case.
The government meanwhile stymied repeated attempts to get at the actual figures until the CBC managed to get some information and also discovered the write-off quietly reported in a volume of the 2018 Public Accounts of Canada, tabled in Parliament on Friday.
Aaron Wudrick of the Canadian Taxpayers Federation says it “defies common sense” that a taxpayer should be on the hook for a government mistake. (Brian Morris/CBC)
The government says that it could not recover the money from the bankrupt version of Chrysler and so has “written-off” the loan, which with interest would amount to over $C 2.5 billion.
CBC also reported in June of this year that a 2014 report from Industry Canada that from the the beginning the money was unlikely to ever be recovered, noting, “Neither Canada nor the U.S. expected any of the loans to be recovered from ‘Old Chrysler’,
Additional information-sources
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