Talks Between Chrysler Lenders and Treasury Fall Apart

DETROIT (AP) - Talks between Chrysler LLC's lenders and the
Treasury Department to reduce the automaker's $6.9 billion in
secured debt and keep it out of bankruptcy protection have
disintegrated, a person familiar with the talks said early
Thursday.

The company's fate was in the hands of about 40 hedge funds that
hold about 30 percent of its debt. Although four banks holding 70
percent of the debt had agreed to erase it for $2 billion, the
hedge funds were holding out for a better deal.

After allowing talks to continue late into the night Wednesday,
Treasury finally ended negotiations after the hedge funds were
unable to come to an agreement, the person said, asking not to be
identified because the talks were private.

The deal's failure means Chrysler will seek bankruptcy
protection unless something can be worked out before the
government's 11:59 p.m. EDT deadline.


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