Chrysler is expected to announce plans to enter into Chapter 11 bankruptcy protection later on today.
Speaking yesterday, President Barack Obama said he was confident "a viable Chysler” would emerge over the coming months, however he stopped short of confirming that the company would file for bankruptcy.
An insider close to the situation has told US media that the deal to place Chrysler into Chapter 11 will be announced today, to allow the company to restructure in order complete the proposed tie-up with Fiat.
Reports are already suggesting that Chrysler CEO Bob Nardelli will be replaced by a member of the Fiat board, with current company CEO Sergio Marchionne a likely candidate for the role.
Fiat is likely to take a 20 per cent stake in Chrysler, with the retiree healthcare trust fund controlling as much as 55 per cent of the streamlined business. The US government would control the remaining stake.
The deal will see Chrysler’s $6.9bn debt wiped clean, with the 46 companies still owed money by Chrysler receiving around $2.25bn in US Treasury compensation for their losses.
Bankruptcy is not certain, but should Chrysler’s debtors agree to the financial remuneration package, Chapter 11 proceedings would be implemented swiftly.
"It would be a very quick type of bankruptcy, and they could continue operating and emerge on the other side in a much stronger position," Obama said.
![](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 4 3"%3E%3C/svg%3E)
![](data:image/svg+xml,%3Csvg xmlns="https://www.w3.org/2000/svg" viewBox="0 0 1 1"%3E%3C/svg%3E)