‘The Government of Ontario has written off this unrecoverable debt’
The Ontario government has written off a $445-million loan to automotive manufacturer Chrysler, saying it has “no legal recourse” to collect it.
The $445-million figure was part of a loan issued by the governments of Canada and Ontario in 2009 to bail out the then-struggling corporation, which had filed for Chapter 11 bankruptcy in the U.S. in the wake of the world economic crisis.
The company was eventually bought out by Italian automotive manufacturer Fiat, leading to the creation of the Fiat Chrysler Automobiles (FCA) holding company in 2014. FCA says it has repaid all its original loans.
Emily Hogeveen, a spokesperson for Ontario Finance Minister Rod Phillips, explained the federal government wrote off their portion of the loan in March 2018.
“Given the structure of the loan, once the federal government made the decision to write off their portion, there was no legal recourse for Ontario to further recover funds,” she wrote in an email.
Hogeveen added the Ontario government wrote off their portion of the loan “consistent with the auditor general’s best practices.”
“This decision has no impact on our fiscal plan, as this debt was accounted for in the years following non-payment,” said Hogeveen.
Lou Ann Gosselin, head of communication for FCA Canada, said the current iteration of the company doesn’t have any remaining outstanding debts as a result of the original loans.
“In 2009, federal and provincial government bridge loans were offered to help the Company restructure,” wrote Gosselin in an email. “In 2011, FCA Canada repaid all outstanding government loans that were due in full, with interest, six years ahead of schedule.”
The Chrysler loan write-off brings the province’s total write-offs for the fiscal year ending March 31, 2019 up to $607 million.
“It’s usually around $150 to $200 million and that’s for things like uncollectible student loans and corporate bankruptcies — things that the province just can’t pursue,” she said.
“Typically the number is way lower than the $607 million. It’s obviously way up because of the Chrysler piece, but the $607 million refers to the overall amount of funding that the province wrote off in total last year.”