• Wall Street Journal, Friday, April 24, 2009 11:15 AM

The United Auto Workers union would end up owning a sizable stake in Chrysler LLC under a Chapter 11 bankruptcy protection plan that the automaker is expected to file as early as next week, Jeffrey McCracken, John D. Stoll and Stacy Meichtry report. The deal would let it get rid of some liabilities, allowing Fiat to cherry pick which operations it wants if a deal is forged, sources say.

Meanwhile, Fiat has begun talks with General Motors about joining forces in Europe and Latin America, sources say. The Italian company could wind up buying a majority stake in GM's Opel. But no GM deal would go forward until Fiat's plans with Chrysler are settled. Fiat has said it wants to take an initial 20% stake in Chrysler.

In either scenario, there would be a major impact on the supply chain of car dealers, parts makers and others, as well as the economies of Midwestern states.

Still, both Fiat and the Obama administration say that Chrysler could avert bankruptcy if a deal can be reached with the banks. "In a negotiation like this, everything is speculation until there's a deal," says one administration official.

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