According to a story from The New York Times, the Treasury Department and Chrysler are readying Chapter 11 bankruptcy documents for filing as early as next week.

The report goes on to say that the filing carries with it an "agreement in principle" with the United Auto Workers that would protect members' benefits packages, including pension and retiree health care obligations.

Whither Fiat? Apparently, the Italian automaker is still very much in the picture, although under this arrangement, it would not reach its stake-holding deal until after Chrysler is already in bankruptcy court. The big outstanding question is where this leaves Chrysler's lenders, who are owed nearly $7 billion.

Some industry watchers are apparently wondering aloud if the bankruptcy filling preparation work is merely a ploy to turn the screws on lenders, who have balked at previous proposals designed to reduce Chrysler debt. More details at the link below.

Chrysler's response to the NYT article is posted below the fold.

[The New York Times | Image: Bill Pugliano/Getty]


Chrysler LLC Response to New York Times Report

Auburn Hills, Mich., Apr 23, 2009 - "On March 30, the Administration recognized the viability of Chrysler LLC and its products, in combination with a Fiat alliance.
Chrysler has consistently said that its viability will be enhanced through an alliance with Fiat, as it represents a change in the Company's business model that expands its global competitiveness.
As we move forward in this process, we believe it's important to keep all options open. Chrysler will continue to work through the end of the month, based on the direction given by the Presidential Auto Task Force, to secure the support of the necessary stakeholders and reach a successful conclusion that the Administration and U.S. Treasury deems appropriate."

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