Chrysler's fate rests with debtors as clock ticks

NEW YORK (AP) — With a government deadline just seven days away, Chrysler LLC is running out of time to work out deals with debtholders, its unions and a foreign partner.

A life outside of bankruptcy appears to hinge on whether Chrysler and the U.S. government can get the company's lenders to forgive a large portion of the company's debt in exchange for stock. But both sides are far apart.

"I've said this is the equivalent of a 70-yard field goal," Michael Robinet, vice president of global vehicle forecasts at CSM Worldwide, said of Chrysler meeting all its obligations in the next seven days.

Analysts have said all other negotiations hang on that deal. However, The New York Times reported Thursday that the Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler, under which the pensions and retiree health care benefits of the United Auto Workers union would be protected. The company would pursue a deal with Italian automaker Fiat SpA while under bankruptcy protection. The lender issue remains unresolved, according to the newspaper.

UAW representatives could not be reached for comment late Thursday.

Chrysler spokeswoman Shawn Morgan said in an e-mail that "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," Morgan said.

Chrysler's secured lenders consist of large and small banks and hedge funds that have poured about $6.9 billion into the Auburn Hills, Mich., company. These lenders — about 45 — would be first in line to get paid if the company's assets were liquidated.

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