Chrysler may be headed for bankruptcy

Auburn Hills, MI – Chrysler could be headed for bankruptcy protection.

A source tells The Associated Press that the automaker's restructuring plan hit a roadblock when talks broke off with its lenders early today.

Chrysler's deadline to get more federal aid by cutting labor costs, slashing debt and taking on a partner is 11:59 p.m. Eastern time.

The company has reached new deals with its unions in the U. S. and Canada.

And an alliance with Italian automaker Fiat was to be signed later today.

But the last piece of the puzzle calls for Chrysler to reduce $6.9 billion in secured debt.

About 40 hedge funds that hold about 30 percent of the debt were demanding a better deal.

Four banks that hold 70 percent of the debt agreed to erase it for $2 billion.