Chrysler filed for bankruptcy protection Thursday in federal court in New York and announced it will temporarily halt most of its vehicle production while it completes a deal with Italian carmaker Fiat designed to revive its tattered fortunes. According to government officials, a new company will be formed that will buy the assets of Chrysler – its plants, brands, land, equipment, as well as its contracts with the union, dealers and suppliers, from the bankruptcy court. Officials said $3.3 billion of the new loans will be used to fund operations during bankruptcy, while the remaining $4.7 billion will allow Chrysler to function normally once it exits bankruptcy. In addition, the Canadian government will loan the companies $2.7 billion to help support Chrysler’s Canadian operations.

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