Ottawa, Ontario – The Canadian government will provide approximately $700 million to struggling auto suppliers, along with a financial cushion to car buyers for warranty repairs.
Industy Minister Tony Clement said the money will be supplied to Export Development Canada, a Crown corporation, which will be able to insure accounts receivable at auto parts suppliers with the funds. Clement also said that Canadians need to be prepared for GM to possibly file under bankruptcy laws for protection.
Clement said that he would prefer to see restructuring plans from General Motors and Chrysler that are acceptable to the governments of both countries, but that it is not the only option. “Clearly we want the restructuring plans to be approved,” he said. “That is our first priority and our first option. But it’s not the only option. We have to ready ourselves for other options, including Chapter 11 in the United States and CCAA bankruptcy protection here in Canada.”
In addition to the accounts receivable funding, Clement announced that a fund will be established to pay for warranty repairs on each new vehicle sold by Chrysler Canada and General Motors Canada while they are restructuring. Clement said it matches what the U.S. has been doing, and that the program will cost the government a maximum of $185.3 million.