DETROIT – Chrysler LLC filed for bankruptcy protection Thursday and will form an alliance with the Italian carmaker Fiat Group SpA in an effort to revive the nation’s ailing third-largest automaker.

The Obama administration said it had long hoped to stave off bankruptcy for the nation’s third largest automaker, but it became clear that a holdout group of creditors wouldn’t budge on proposals to reduce Chrysler’s $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.

“No one should be confused about what a bankruptcy process means,” President Barack Obama said in a midday announcement. “This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler’s revival.”

Chrysler filed for Chapter 11 bankruptcy protection in New York on Thursday with the hopes of emerging in as little as 60 days under the new partnership with Fiat. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.

The deals give Chrysler “a new lease on life,” Obama said.

“This is not a sign of weakness,” he said. “I have every confidence that Chrysler will emerge from this process stronger and more competitive.”

Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties. But Chrysler said Thursday that it will idle its plants during the legal proceedings. The company’s chief executive, Robert Nardelli, said he will leave when the bankruptcy is complete.

When that occurs, the Auburn Hills, Mich.-based automaker would end up owned by the United Auto Workers union, the U.S. government and Fiat. The Canadian and Ontario governments, which are also contributing financing, would have small stakes.

But Fiat, which the Obama administration hopes can jump start Chrysler with its fuel-efficient and lower-emission technology, could end up the majority stakeholder. Fiat would initially get 20 percent, a share that could rise to 35 percent if certain benchmarks are met. Fiat said Thursday it could get an additional 16 percent by 2016 if Chrysler’s U.S. government loans are fully repaid.

Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.’s finance arm. The new GMAC will get government support. Chrysler’s base of dealers would also be pared down.

The Treasury Department’s auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation’s automakers.

Along with the Fiat deal, the UAW ratified a cost-cutting pact Wednesday night.

Treasury reached a deal earlier this week with four banks that hold the majority of Chrysler’s debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 percent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and they were holding out for a better deal.

“I don’t stand with them,” Obama said.

A person briefed on Wednesday night’s events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

On Thursday, a group of funds identifying themselves as 20 of Chrysler’s “non-TARP lenders” released a statement saying they had been sidelined during negotiations between lenders and the government. The group, which said it holds $1 billion in Chrysler debt, complained that the four banks were “obviously conflicted” because they had accepted money from the government’s Troubled Asset Relief Program while they had not gotten TARP money.

The group said its offer to the Treasury Department to reduce its claim to 40 percent was “flatly rejected or ignored.”

Fiat is getting its stake in Chrysler for giving the company access to its fuel-efficient technology, a move toward cleaner cars that the Obama administration thinks is critical to Chrysler’s future survival. The company has committed to building Fiat cars in Chrysler factories, to be sold as Chryslers.

Ford Motor Company has announced that it expects annual savings of $500 million through a wage deal with its union while the White House revealed that U.S. automakers have not yet presented specific viability plans to President Barack Obama

Obama expects the industry will face some form of restructuring, the White House said on Wednesday.

The US President believes “we need an auto industry in this country but the auto industry is likely to be one in the future that is restructured and re-imagined from where it is today so that Americans are buying cars that are built by and for Americans,” the White House said.

Earlier this week, members of the Obama administration’s autos task force visited the Detroit area where they again met with executives of General Motors Corp (GM.N) and Chrysler. The two companies are seeking up to $39 billion in federal aid.

GM and Chrysler received a $17.4 billion government bailout in December and have asked for nearly $22 billion more. The government has until March 31 to determine if the automakers can become commercially viable, and if they should get additional public funds.

Unlike GM and Chrysler, Ford is trying to restructure its finances without a government bailout as the industry is battered by the economic recession.

Through a deal with the United Auto Workers, Ford expects its hourly wages would now be in the “ballpark” of foreign-based rivals, the company said.

The agreement, which was ratified by Ford-UAW members, trims average wages and benefits for UAW hourly workers to about $55 per hour this year, while the U.S. operations of foreign-based automakers — or what executives call “transplants” — pay workers on average $48 to $49 per hour, Ford said.

Meanwhile, Toyota Motor Corp (7203.T) warned that it is developing contingency plans to deal with any disruption in the U.S. automotive supply chain.

Jim Lentz, Toyota’s top U.S. executive, said the company has concerns with about 100 suppliers, but is particularly worried about 20 to 30 within that group. He did not identify the suppliers.

Auto suppliers have asked the U.S. government for $18.5 billion in assistance to offset credit woes and slowing production at automakers, which has led to a sharp decline in payments.

Separately, German auto parts giant Continental (CONG.DE) wants to cut nearly 2,000 jobs and close production at two high-cost European tire manufacturing sites.

Shares in Continental, now controlled by smaller rival Schaeffler, closed down 4.3 percent at 13.30 euros while the DJ Stoxx European car sector index .SXAP rose 2.9 percent.

Also, Russia’s biggest car maker, AvtoVAZ (AVAZ.MM) is cutting production by at least 36 percent this year as the global financial crisis takes its toll on demand for cars.

AvtoVAZ is targeting output of 590,000 cars in 2009 against 920,000 in 2008.

WASHINGTON – Top executives of Chrysler LLC took pleas for billions in new loans to members of the Obama administration’s auto task force Wednesday.

Chrysler Chairman and CEO Bob Nardelli, Vice Chairman Tom LaSorda and Chief Financial Officer Ron Kolka huddled behind closed doors with the administration panel, said a Chrysler official, who spoke on condition of anonymity because of the private nature of the talks.

Struggling to survive, Chrysler and General Motors Corp. have received $17.4 billion in federal loans. They are seeking an additional $21.6 billion to keep operating during a difficult recession and a major plunge in auto sales.

Auburn Hills, Mich.-based Chrysler has received $4 billion in loans and wants another $5 billion in federal aid and the approval of an alliance with Italian automaker Fiat SpA.

The company said in a Feb. 17 progress report that it needed the loans to stave off a liquidation of the company. The automaker lost $8 billion last year.

President Barack Obama’s auto task force is trying to restructure GM and Chrysler by March 31. If GM and Chrysler fail to make a convincing case, the administration could pull the loans and essentially force the companies into bankruptcy protection.

Obama, in his speech to Congress on Tuesday, said, “Years of bad decision-making and a global recession have pushed our automakers to the brink” and the U.S. should not “protect them from their own bad practices.”

But he said the administration was “committed to the goal of a retooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.”

Members of the task force, led by Treasury Department advisers Steven Rattner and Ron Bloom, met with lawmakers and suppliers earlier in the week and are scheduled to meet with GM executives on Thursday.

General Motors has said it could run out of money by the end of March and needs $2 billion in March and another $2.6 billion in April to stay in business.

GM spokesman Tom Wilkinson said the executives will travel to Washington by commercial airline. After being skewered by lawmakers for flying in corporate jets to seek government loans last year, GM announced it would return its five leased jets to their leasing companies and disband its aviation operations.

Source: Associated Press

The Tuned Group staff would like to congratulate the 44th President of the United States, Barrack Obama. Today marked a milestone in American history and will long be imprinted in the future as a changing point in the world we currently live in. Today also marked the inauguration of “Cadillac One”, the new Presidential limousine that has been developed for 3 years specifically for this January 20th Inauguration celebration.
The new vehicle marks the pinnacle in both safety and performance for heavy armored vehicles. There is no specific vehicle model designation for this Presidential limo, but design cues come from various sedans like the CTS and even the Escalade.
Much of the car is constructed from vacuum weaved carbon kevlar for strength and weight savings along with anti bomb technology capable to withstand the blast from dynamite or even C-4 explosives. Power will be delivered from a Diesel V8 but no information has been released as far as performance numbers.
Windows are impenetrable from high gauge round bullets or anti-tank rounds.
The paint also has a function which is to deflect lasers or “spotters” typical of sniper riffles. The new limo is now referred to by the secret service as “The Beast”.
We would like to welcome the new Administration and wish the best of luck to this new government.