Auto workers voted on Wednesday to approve a new contract with Chrysler and Fiat, granting major concessions to ensure the survival of the number three US automaker.
But with the clock ticking on a deadline at midnight on Thursday for a viable restructuring plan that would clinch more government funding, doubts persisted that lenders would agree to reduce Chrsyler's debt, key to keeping it out of bankruptcy.
Even as autoworkers voted on the new contract here, the Wall Street Journal reported that a large number of the company's 46 creditors voted against a deal that would give them $2.5-billion cash in return for forgiveness of $6.9-billion in Chrysler debt.
The lender's refusal would make filing for protection under US bankruptcy laws the likely next step, but President Barack Obama suggested in a televised news conference earlier on Wednesday that even then a quick restructuring could be achieved.
"I am actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler auto company," Obama said, vowing to end the US government's auto bailouts as soon as possible.
The details of a marriage between Chrysler and Italy's Fiat "have not yet been finalized, so I don't want to jump the gun," Obama added at the White House news conference to mark his first 100 days in office.
"But I am feeling more optimistic than I was about the possibilities of that getting done," he said.
Under a preliminary deal signed in January, Fiat would initially take a 20 percent stake which would then rise to 35 percent and could eventually reach 51 percent.
Fiat would pay nothing, but would provide access for Chrysler to its technology, notably for smaller, more economical vehicles.
If all else fails, Obama said, Chrysler had made "prudent" preparations to go into bankruptcy restructuring.
"It's not clear that they'll have to use it," he said, but any such reorganization for Chrysler would be rapid.
"The fact that the major debt holders appear ready to make concessions means that even if they ended up having to go through some sort of bankruptcy, it would be a quick type of bankruptcy and they could continue operating on a merger on the other side in a much stronger position."
Earlier, a source familiar with the discussions told AFP: "Chrysler will survive and avoid liquidation, whether that happens in or out of bankruptcy remains uncertain at this point."
Meanwhile, autoworkers voted overwhelmingly to approve a new contract with Chrysler and Fiat despite the loss of bonuses, reduced unemployment benefits and cuts to health care coverage, officials said.
Under the contract, autoworkers also will give up pay increases for the cost of living and accept limits on their right to strike during disputes.
The United Auto Workers said the contract gained the backing of 82 percent of its production workers, 80 percent of its skilled-trades workers, 90 percent of its office and clerical workers, and 94 percent of unionized engineering workers.
The vote was an indication of the high stakes involved with the government insisting on a viable restructuring plan by midnight Thursday before it sinks more public funds into the company.
"This has been a challenging time filled with anxiety and uncertainty for our membership," said UAW President Ron Gettelfinger.
"Our members have responded by accepting an agreement that is painful for our active and retired workers, but which helps preserve US manufacturing jobs and gives Chrysler a chance to survive."
Chrysler has not put a dollar figure on the savings from the contract but Ford has said its own new agreement with the union signed in February will save more than $500-million this year.