Chrysler to file for Chapter 11 bankruptcy protection

CHICAGO, April 30 (Xinhua) -- U.S. automaker Chrysler LLC has to file for Chapter 11 bankruptcy protection after talks between the Treasury Department and the company's creditors collapsed early Thursday morning, according to Detroit local reports.

Talks between the Treasury Department and Chrysler's lenders aimed at keeping the troubled automaker out of bankruptcy collapsed after the Obama administration's automotive task force worked into early morning on Thursday and failed to persuade several hedge funds and other lenders to accept a deal to reduce Chrysler's debt, said people involved in the talks.

J.P. Morgan Chase, which leads the creditor group as Chrysler's largest lender, gave the other 45 banks and hedge funds 90 minutes on Wednesday to vote on the deal. However, many funds voted no and refused to budge, meaning a trip to bankruptcy court is unavoidable for Chrysler by the deadline of Thursday.

No new talks are set for Thursday although Chrysler still has more than a dozen of hours before the 11:59 p.m. deadline to get concessions from its lenders, who had loaned the company 6.9 billion dollars. Chrysler officials had no comments on media's bankruptcy report.

U.S. President Barack Obama is scheduled to discuss the 85-yearold carmaker's future Thursday noon, when he is supposed to ask for the historic bankruptcy of Chrysler and announce a signed deal with Chrysler and Italian automaker Fiat.

Analysts said that the filing for bankruptcy will not mean the halt of operations or liquidation for the iconic old automaker, and it is really another kind of restructuring as the administration expects to use the bankruptcy process to join Chrysler with Fiat.

What's more, the United Auto Workers (UAW) union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night, which means the way to reach a partnership deal has been paved.

President Obama said during a press conference Wednesday night that he was more confident than he was 30 days ago that Chrysler would be able to emerge from the process as a healthy, competitive company.

It is not the first time for the automaker giant to face bankruptcy. Chrysler narrowly avoided bankruptcy in 1980 after winning 1.5 billion dollars of government loans.

Chrysler was sold for 36 billion dollars to Daimler-Benz in 1998, but the deal ended in 2007, when the German automaker sold Chrysler to Cerberus Capital Management LP for 7 billion dollars.

Although Chrysler avoided collapse last December as the previous Bush administration provided 4 billion dollars as bailout loans, the company's sales fell 30 percent in 2008 -- compared with an industry decline of 18 percent. Chrysler's sales declined 46 percent in the first quarter this year.