Old Chrysler in loan talks

DETROIT — The old Chrysler — the automaker’s leftover assets that remain in bankruptcy court — lost $344 million in July, and the company continues negotiating with the U.S. Treasury over a new schedule for repaying $3.3 billion in loans that are technically in default.

The July loss, reported in a bankruptcy filing, was down sharply from a $10.2 billion loss reported for June. That large loss reflected the government-financed sale of the automaker’s most viable assets to Chrysler Group LLC.

That new Chrysler company is owned 20 percent by Fiat, 67.7 percent by the UAW’s Voluntary Employee Beneficiary Association and 12.3 percent by the governments of the U.S. and Canada.

In the transaction to create the new company, the U.S. Treasury paid $2 billion to Old Carco LLC, the name for the bankrupt pieces of the automaker.

The $3.3 billion owed to the Treasury Department represents the balance of a $3.8-billion note payable that the U.S. government extended to the old Chrysler in May to cover capital expenditures, warranty claims and other administrative expenses tied to the bankruptcy process. Treasury did direct $600 million of that note be paid to GMAC, which is the primary wholesale and retail lender for the new Chrysler and its dealers.

The balance of that note was due June 30. Old Chrysler has not been able to pay it. Treasury issued its notice of default Aug. 13.

A Treasury department spokeswoman declined to comment on negotiations over the default.

Old Carco is required by bankruptcy law to file monthly financial reports even though it is not engaged in any significant operations. Those reports are unaudited but reviewed by Ronald Kolka, Old Carco’s CEO.

The company, which owns eight factories or other sites that it licenses to Chrysler Group LLC, charges new Chrysler for the costs of operating those buildings. For July, however, Old Carco reported only $2 million of revenue. That figure could increase in coming months as Old Carco sells some of its assets.