Although the four banks that hold 70 percent of Chrysler's debt had agreed to wipe it off the books for a cool $2 billion, the snag came from the remaining 30 percent of the debt which is held by 46 hedge funds. Although the government had added an additional $250 million to the debt cancellation cause, the hedge funds apparently felt they could do better.
The groups had been given a deadline of 6PM Wednesday to settle the matter, but that deadline has passed. The Treasury Department decided to end talks around midnight because there was no central authority, and bargaining with 46 funds was too much.
There is still a midnight deadline today, but it is believed President Obama will allow Chrysler to go into bankruptcy protection, with a judge determining how much creditors will get. Chrysler would continue to operate, however, likely with Fiat leadership. It is widely believed that Fiat CEO Sergio Marchionne will replace Chrysler CEO Robert Nardelli.
[Source: AP via CBS News Image Source: Bill Pugliano/Getty]