Bailout Watch 476: Canadian Government Fronts ChryCo CA$250 Million for Payroll

Robert Farago
by Robert Farago

Mega dittos from our neighbors to the north. The Globe and Mail reports that the Canadian government is also playing hard man re: GM and Chrysler’s call on federal bailout bucks. Yada, yada, yada, restructure, union concessions, new plans, bankruptcy. And then, this:

Chrysler was unable to meet its Canadian payroll today without a $250-million advance on a $1-billion bridge loan from Canadian taxpayers. To qualify for up to $4-billion in long-term aid, Chrysler has to conclude now-stalled negotiations with the CAW on a cost-savings contract and complete the Fiat deal.

To stave off an immediate crisis, the federal and Ontario governments offered the bridge loans—including up to $3-billion for GM—to allow them to continue operating while they work to satisfy U.S. and Canadian government demands.

The CA$250 million is an advance on the billion dollar bridge. And make not mistake about it: ChryCo is sucking on fumes.

The company, which employs 9,500 workers and has assembly plants in Windsor and Brampton, Ont., is teetering on the brink of failure.

“Very clearly, if the money had not been forwarded today, they would not have been able to meet payroll today or tomorrow,” Mr. Clement told a news conference.

The result would have been bankruptcy protection and, potentially, the liquidation of Chrysler’s assets in Canada.

Chrysler no doubt welcomes the contribution to their cash flow, but they won’t be glad to hear one of the strings attached to the next round of bailout bucks—should they ever get that far: they can’t use the money to pay their $500 million tax bill. That idea makes my head hurt. [Thanks to boosterseat for the link.]

Robert Farago
Robert Farago

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  • Anonymous Anonymous on Mar 31, 2009

    Read some history. Read about the German Economic Miracle in West Germany while socialist East Germany turned into a hellhole.(and remains backwards to West Germany to this day) West Germany wasn't rebuilt by socialism but hard work. You are going to soon see the results of Obama's Keynesian spending and socialist policies and they will not be good results. Time after time the socialists do the same thing and it always ends in failure. Yet they do it again. I don't see West Germany as that much more socialist than the US. If the government wasn't running Freddie and Fannie and didn't replace the management at AIG this economic collapse wouldn't have happened for a few more years. Of course Europe has lagged the US for decades.

  • BDB BDB on Mar 31, 2009

    The German economic miracle involved massive fiscal stimulus and government intervention. Unless we're not talking about some alternate Harry Turtledove history, anyway.

  • Anonymous Anonymous on Mar 31, 2009

    The German economic miracle required much hard work in a country that was flattened. You didn't have some Obama type showereing the people with money and things being fixed all by themselves. What you like to call socialism is nothing of the sort. East Germany was socialism. In West Germany it was hard work and capitalism. Of course after things got going good what you called socialism began. It is actually the government sucking the money out of capitalism and handing it to the socialists. Much like the lamprey(socialists) latches onto the salmon(capitalism) and goes along for the ride. The problem is you get to many lampreys and you kill the salmon. Which is what the governments have done, sucked the life right out of industry and the economy. A lamprey is a parasite and on its own will starve. Which is what is actually now happening to the US government.

  • DerKenner DerKenner on Apr 01, 2009

    so that's what it looks like when this place gets trolled good work bluecon

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