US President Barack Obama has confirmed that American automaker Chrysler is filing for Chapter 11 bankruptcy protection, pushing for the decision after the company could not show some measure of viability at the deadline imposed by the government.

After some the overnight collapse of last-minute talks with Chrysler’s debtors, it was clear that Chrysler would be filing for bankruptcy protection. This decision could contribute speed up the union between Chrysler and Italian automaker Fiat. Chrysler’s operations will stay as normal while under protection, without any job cuts planned. However, there may be cuts in dealerships.

“I don’t think there should be a stream of subsidies to automakers, but helping them to restructure now, when sales have collapsed, is realistic,” said President Obama as he was pushing for the decision. “The necessary steps have been taken to give one of America’s most-storied companies a new lease on life,” he added later, when the decision was made.

Chapter 11 of the US Bankruptcy Code allows a company to remain in business and allows for reorganization even while it cannot pay for its debt to creditors.

Source: Autocar