Chrysler to enter Chapter 11.
Discussion
Chrysler is to enter Chapter 11 bankruptcy protection, a White House official has confirmed.
The White House described the decision as a "surgical short bankruptcy" which should last between 30 and 60 days.
US president Barack Obama said the government had "worked very hard to avoid this", but blamed Chrysler's lenders for not wanting to participate in the deal to stop it from entering into Chapter 11.
A deal has also been reached to combine the company with Fiat that will allow Chrysler to stay in business.
US officials said the Treasury Department will provide Chrysler with $3 billion (£2bn) to $3.5bn (£2.36bn) in additional loans to fund operations during bankruptcy. The US government anticipates that it will provide an additional $4.5bn (£3bn) of financing to allow Chrysler to exit bankruptcy.
The number of US Chrysler dealers will decrease over time, but no jobs will be lost in the short term, Obama added.
Obama has already said that Chrysler would emerge stronger after any move into bankruptcy protection.
Analysts have stated that Chrysler and its possible co-op partner Fiat prefer to go into Chapter 11 in order to give its lenders less money.
US Chapter 11 bankruptcy protection gives a US company time to rearrange its finances under a court-supervised procedure, while continuing to trade, protected from its creditors.
Chrysler's bankruptcy will further impact consumer confidence with the manufacturer's brands in the UK as customers become uncertain about the future of the business. If the company can bounce back with help from Fiat, it will take time before customer confidence will return.
The White House described the decision as a "surgical short bankruptcy" which should last between 30 and 60 days.
US president Barack Obama said the government had "worked very hard to avoid this", but blamed Chrysler's lenders for not wanting to participate in the deal to stop it from entering into Chapter 11.
A deal has also been reached to combine the company with Fiat that will allow Chrysler to stay in business.
US officials said the Treasury Department will provide Chrysler with $3 billion (£2bn) to $3.5bn (£2.36bn) in additional loans to fund operations during bankruptcy. The US government anticipates that it will provide an additional $4.5bn (£3bn) of financing to allow Chrysler to exit bankruptcy.
The number of US Chrysler dealers will decrease over time, but no jobs will be lost in the short term, Obama added.
Obama has already said that Chrysler would emerge stronger after any move into bankruptcy protection.
Analysts have stated that Chrysler and its possible co-op partner Fiat prefer to go into Chapter 11 in order to give its lenders less money.
US Chapter 11 bankruptcy protection gives a US company time to rearrange its finances under a court-supervised procedure, while continuing to trade, protected from its creditors.
Chrysler's bankruptcy will further impact consumer confidence with the manufacturer's brands in the UK as customers become uncertain about the future of the business. If the company can bounce back with help from Fiat, it will take time before customer confidence will return.
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