Bob Nardelli, Chairman and CEO of Chrysler, announced today the formation of a strategic global alliance with the Fiat Group. Unfortunately, Chrysler couldn't come to agreements with its creditors and under the direction of the U.S. Treasury, Chrysler LLC and 24 of its wholly owned U.S. subsidiaries today filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York.

Chrysler has also stated its intentions to file a motion under Section 363 of the Bankruptcy Code requesting the swift approval by the Court of the agreement with Fiat and the sale of Chrysler's principal assets to the new company. The purpose of this is to speed up the process of bankruptcy. It should allow a leaner new company to emerge in a matter of 30 to 60 days.

The plan is to halt the manufacturing operations starting on Monday, May 4, 2009, for the 30 to 60 day restructuring. Following the restructuring the newly formed company will resume normal production schedules.

"Even though total agreement was not possible, I am truly grateful for all that has been sacrificed, on the part of many of Chrysler's stakeholders to reach an agreement in principle with Fiat," said Nardelli. "My number one priority has been to preserve Chrysler and the thousands of people who depend on its success. While I am excited about the creation of the global alliance, I am personally disappointed that today Chrysler has filed for Chapter 11. This was not my first choice. "

Nardelli plans on staying with the company through the restructuring, but upon completion of the restructuring and sale of the assets to the newly formed company, he has notified Chrysler LLC's Board of Management and the U.S. Treasury that he will step down as the CEO and Chairman. Nardelli will then return to Cerberus Capital Management LP as an advisor.

"Now is an appropriate time to let others take the lead in the transformation of Chrysler with Fiat," said Nardelli. "I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance."

The new owners of the newly formed company will be as follows.

Fiat cannot become a majority owner until after all U.S. government loans have been completely repaid.

"To create this vibrant new company, we are using this structured bankruptcy to rapidly implement tough but necessary changes, including: the agreed upon wage and benefit structure for active and retired employees that is competitive with those of transplant manufacturers; a reduction of debt and interest expense; the disposition of idle assets; a rationalized and more efficient dealer network; and sound agreements with our suppliers," said Nardelli.

"We want to personally assure everyone that the new company will produce and support quality vehicles under the Jeep®, Dodge and Chrysler brands as well as parts under the Mopar® brand. Chrysler employees will become employees of the new company. Chrysler dealerships remain open for business serving our customers. All vehicle warranties will be honored without interruption and consumers can continue to purchase our vehicles with complete confidence," explained Nardelli.

"This partnership transforms Chrysler into a vibrant new company with a wealth of strategic advantages," said Nardelli. "It enables us to better serve our customers and dealers with a broader and more competitive line-up of environmentally friendly, fuel-efficient high-quality vehicles. Benefits to the new company include access to exciting products that complement our current portfolio, technology cooperation and stronger global distribution."

Overall, the new company will be much different than the one that currently exists. The environmentally friendly, fuel-efficient high-quality vehicles that will be produced probably won't include cars such as the new Challenger, which is a shame as most retro-cars that have been produced by other manufacturers have missed the mark big time. The Challenger brought the retro look with modern technology in a way not done before when reintroducing a famous former nameplate to the auto market. Dodge learned the lesson when they brought back the Charger and disappointed many with the styling of the car missing the mark in doing the nameplate justice. The Challenger, if it had a chance, could have fixed this problem, but the new envioronmentally friendly cars sounds like a future line of cars that will be filled with Toyota Prius like vehicles and attract an entirely different type of buyer.

Only time will tell though as we wait to see what Fiat brings to the table for the newly formed company.