US Prepares Chrysler for Bankruptcy

It seems like Chrysler's fate is now sealed: the American car giant is going nowhere but towards Chapter 11, as bankruptcy remains the only possible option taking into account the current situation of the company. Although the manufacturer is facing a 30-day deadline to come up with a viable plan that could turn it into a competitive player in the industry, the Treasury Department is already thinking at bankruptcy, with the Chapter 11 filing to be ready as soon as next week, according to a report by the New York Times.

The United States government has asked Chrysler to reach an agreement with the United Automobile Workers (UAW) union, as well as with Fiat, the Italian manufacturer who may get a stake of up to 35 percent in case the deal goes through. However, the whole process is much more complicated than initially thought, with Fiat now turning its eyes to other companies, including the German brand Opel.

Back in February, the Obama administration agreed to provide up to $6 billion in state funds beside the $4 billion loan package it already approved. However, Obama's Task Force has asked for a strong survival plan that could demonstrate Chrysler's viability in exchange for a new loan package.

But, judging by the current situation, as well as by the current status of the Fiat-Chrysler negotiations, the American company is slowly but surely stepping towards Chapter 11. Furthermore, according to the aforementioned source, the Treasury Department has already agreed with the UAW to protect the members in case bankruptcy becomes inevitable. In addition, Chrysler may still complete the Fiat agreement, even under Chapter 11.

If that's possible and if Chrysler is indeed capable to stay out of court is one of the most interesting enigmas whose end we'll discover by next Thursday.