Yesterday, in a bankruptcy court hearing held for Chrysler LLC (and 24 of its wholly owned subsidiaries), which filed for Chapter 11 bankruptcy protection last Thursday, U.S. Bankruptcy Judge Arthur Gonzalez issued an interim order approving Chrysler's motion for permission to enter into a $4.1 billion debtor-in-possession (DIP) financing arrangement from the U.S. Treasury and Export Development Canada, including interim approval of up to $1.4 billion of borrowings under the DIP facility, subject to an approved budget. The DIP facility was reduced from $4.5 billion to $4.1 billion, with the U.S. Treasury and Export Development Canada funding draws on a 3:1 ratio. Judge Gonzalez also granted interim approval for Chrysler to use $400 million of cash collateral.
The DIP financing arrangement was opposed by a group of Chrysler’s secured lenders, known as the Non-TARP Lenders because they include investment funds that have not received TARP funding, holding a portion of Chrysler’s $6.9 billion in secured debt. The group also objects to the proposed to fund the automaker's operations while seeking to win court approval for a sale of substantially all of Chrysler's assets to Italian automaker Fiat S.p.A.,claiming that such a sale would be illegal and in violation of federal law, “in effect preclud[ing] anyone but the government from bidding on [Chrysler’s] assets.”
The hearing to approve Chrysler’s motion for bidding procedures for the auction of its assets was postponed until today.