The life jacket will only be available for so long, according to Tony Clement.
The industry minister for Canada has announced more federal aid of $566 million (U.S.) to guarantee payments to auto suppliers from Chrysler and General Motors if they miss payments or enter some form of structured bankruptcy. Tony Clement also announced today that the Canadian Government would stand behind the new vehicle warranties of Chrysler and GM should the companies go bankrupt. Clement said bankruptcy remains a possibility that people should prepare for.
GM is the best selling carmaker in Canada. Chrysler is number four.
Fritz Henderson, the CEO who was in charge of the now rejected restructuring plan at GM, reversed his previously held position against bankruptcy on his second day on the job. The abrubt “about face” came after the Obama administration forced his predecessor, Rich Wagoner, to resign as a sop to irate taxpayer’s whose anger continues to grow over the mishandled use of their money to save financial institutions from bankruptcy. The Wall Street firms then paid hundreds of millions of dollars in bonuses to the very executives who were culpable in the global financial meltdown because of their elaborate and ongoing Ponzi schemes.
The latest moves to help the auto industry get through the ongoing Great Recession parallel ones taken by the Obama administration as it dismissed the restructuring plans of the Chrysler and GM last month as “not viable. ” Bankruptcy remains a favored option by some U.S. politicians and a clear majority of voters, according to the latest opnion poles.
“The recent global credit situation has pinched these companies’ cash flow to a trickle,” said Clement at a news conference. “It is clear as we go forward there is a need to have insurance for accounts receivable,” he said.
The Canadian government had already provided ailing suppliers with up to $445 million (U.S.) from Export Development Canada. There are roughly 650 parts-making factories in Canada, providing almost $30 billion (U.S.) worth off parts to the auto industry, according to Clement.
GM Canada said it “welcomes today’s announcements from the federal government and we remain focused on taking all necessary steps, working with the governments and all our stakeholders to quickly and successfully complete our restructuring in this challenging market.”
Neither the subsidiary nor the parent company is not providing updates on where it is in the contentious talks with bondholders, dealers and its unions to clean up its debt-ridden balance sheet.
Chrysler, too, is declining to provide updates. Chrysler’s only way to avoid bankruptcy appears to be a takeover from Fiat, which is under negotiation with the blessing of the U.S. government.