Chrysler files for bankruptcy protection
WASHINGTON (AP) -- Chrysler LLC filed for bankruptcy protection Thursday and announced it will temporarily halt most of its vehicle production while it completes a deal with Italian carmaker Fiat designed to revive its tattered fortunes.
The Obama administration said it had long hoped to stave off bankruptcy for the third-largest U.S. automaker, but it became clear that a holdout group of creditors wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.
"No one should be confused about what a bankruptcy process means," President Barack Obama said in a midday announcement. "This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler's revival."
Chrysler filed for bankruptcy protection in New York with the hopes of emerging in as little as 60 days under the new partnership with Fiat. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.
The deals give Chrysler "a new lease on life," Obama said. "I have every confidence that Chrysler will emerge from this process stronger and more competitive," he said.
Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties. But Chrysler said Thursday that it will idle its plants during the legal proceedings. The company's chief executive, Robert Nardelli, said in an e-mail to employees that he will leave when the bankruptcy is complete.
