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 bankruptcy.
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 prosper.