Chrysler to get up to $8B from govt for bankruptcy

UPDATE Chrysler LLC filed for bankruptcy protection Thursday afternoon and announced it has reached a partnership agreement with Italian automaker Fiat SpA. The filing in U.S. Bankruptcy Court in New York is an effort to quickly wipe clean Chrysler's balance sheet, backed with $8 billion in U.S. government financing, in the hopes that the company will emerge in 30 to 60 days.

The White House forced the move Thursday after talks between the Treasury Department and some of the Auburn Hills automaker's creditors failed to reach an agreement.

"It will be efficient. It's designed to deal with those last few holdouts, and it will be controlled," President Barack Obama said in a 12-minute address from the White House. "It will not disrupt the lives of the people who work at Chrysler or live in communities that depend on it. … I have every confidence that Chrysler will emerge from this process stronger and more competitive."

Under the plan the administration outlined Thursday, the Treasury Department will provide Chrysler with up to $3.5 billion in debtor-in-possession financing, and the Canadian and Ontario governments will provide around $800 million and get 2 percent of Chrysler's equity.

04/30/09 Chrysler will file for Chapter 11 bankruptcy protection in New York on Thursday and will be eligible for up to $8 billion in federal aid to rebuild the ailing automaker, according to senior administration officials. The officials say bankruptcy is necessary after talks with some of Chrysler's holdout creditors over the company's $6.9 billion in debt fell apart last night.