A $445-million loan made to automaker Chrysler during the financial crisis has been written off by the Ontario government because it can’t legally recover the debt, the province’s ministry of finance said on Tuesday.
The move was unavoidable because of the federal government’s decision last March to forgive Chrysler $2.6 billion in borrowing and because one of the two divisions of the automaker that got the funds subsequently went under, according to Emily Hogeveen, a spokeswoman for Ontario Finance Minister Rod Phillips.
“Because of the way government financing works, we can’t pursue, and the Feds either can’t really pursue, something that doesn’t exist anymore,’’ Hogeveen said by phone. “And because it was a joint-structured funding bailout,” she said, “once the feds made the decision they’re were writing it off, the province also cannot recover the funding.”
Bailouts to Chrysler and General Motors Co. were in the billions as the automakers restructured to pull out of the financial crisis. Queen’s Park lent some $960 million to Chrysler alone. The company merged with Fiat in 2014 and the new international entity reported 2018 net profit of 3.6 billion euros ($5.3 billion).
Chrysler’s Canadian subsidiary, FCA Canada Inc., didn’t immediately respond to a phone call seeking comment.
The writeoff was part of an Ontario government order in council determining that a total of more than $600 million in debts were uncollectable, including student loan writeoffs and personal and corporate bankruptcies.
The procedure followed the Auditor General best practices and won’t impact the government’s fiscal plan because the amount had already been accounted for, Hogeveen said.
Copyright Postmedia Network Inc., 2019
