Auto giant Chrysler may file for bankruptcy

Agence France - Presse

The Treasury had sweetened the deal with an increase of $250 million over a previous cash offer that had been accepted by Chrysler's major creditors but not by all holders of Chrysler's secured debt, the report said. The creditors' rejection of the latest offer would make filing for protection under bankruptcy laws the most likely outcome.

The New York Times, which also reported on the failure to win over the debt holders, said Chrysler was likely to file for so-called Chapter 11 protection.U.S.

President Barack Obama suggested in a televised news conference earlier Wednesday that even if Chrysler were forced into the bankruptcy courts, a quick restructuring could be achieved. "I am actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler auto company," Obama said. The details of a marriage between Chrysler and Fiat "have not yet been finalized, so I don't want to jump the gun," Obama added at the White House news conference to mark his first 100 days in office. "But I am feeling more optimistic than I was about the possibilities of that getting done," he said.

Under a preliminary deal signed in January, Fiat would initially take a 20 percent stake which would then rise to 35 percent and could eventually reach 51 percent.Fiat would pay nothing, but would provide access for Chrysler to its technology, notably for smaller, more economical vehicles.If all else fails, Obama said, Chrysler had made "prudent" preparations to go into bankruptcy restructuring."It's not clear that they'll have to use it," he said, but any such reorganization for Chrysler would be rapid.