Update: Chrysler to Go Into Bankruptcy

Contradictory news about the future of Chrysler have surfaced throughout the day, yet, as we reported one hour ago, one thing seems to be certain. Chrysler will seek Chapter 11 protection, after failing to reach an agreement with a part of its lenders. The news was confirmed by a White House official are we are expecting a news conference on the matter later in the day.

"While the administration was willing to give the holdout creditors a final opportunity to do the right thing, the agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," the official was quoted as saying by

As we said, to blame is a group of lenders which did not agree to the proposed cash-for-debt swap, which stated they will receive $2 billion in cash to settle a $6.9 million debt. With them holding 30 percent of Chrysler's debt, the US and Chrysler needed to get a 100 percent approval of the concessions.

"Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward," the source added, confirming that the Fiat alliance will happen, regardless of Chrysler's bankruptcy.

"I'm actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler auto company out there," President Obama said earlier today, adding that in case of a bankruptcy, the process will be a fast one.

Update: Chrysler files for bankruptcy
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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