Talks with a small group of creditors broke off last night. The automaker will keep operating and a restrucutring plan in the works for some weeks will move forward. That includes a likely takeover by Fiat. President Obama will be talking about the latest news at 9 a.m. From the WSJ:

One reason Chrysler needs to file for bankruptcy protection is so that Fiat can clear out hundreds of auto dealers from its sales network, which is easier to do in bankruptcy, where dealer franchisee agreements can quickly be rejected or amended. The auto maker also has asbestos and environmental liabilities that Fiat doesn't want and are more easily shed in bankruptcy court.