U.S. President Barack Obama says struggling U.S. automaker Chrysler has
made a partnership with the Italian car company Fiat, and will file for
The announcement came after efforts to work out agreements with all of Chrysler's debt holders failed.
Over the past few weeks, workers, dealers, and most lenders all agreed
to reduce their claims on the battered company.
But Mr. Obama said the
bankruptcy was necessary because a small group of investors, including
hedge funds, held out for more money.
Chrysler will use a type of bankruptcy that protects it from lawsuits
by lenders while it reorganizes its finances and continues operating.
The government will provide the company with about $8 billion in
additional loans to help it through the transition.
Mr. Obama said the partnership with Fiat will provide Chrysler with the
means to build fuel-efficient cars, emerge from bankruptcy, and