WASHINGTON: Chrysler LLC will proceed with Chapter 11 bankruptcy protection to complete its restructuring after attempts to reach concessions with lenders faltered, an administration official said yesterday.

The US Treasury had been in tense negotiations with a small group of hedge funds to wash out its remaining debt and facilitate an alliance with Fiat SpA, a step considered essential to Chrysler's survival.

Those last-ditch efforts were unsuccessful as the clock wound down on a government-imposed deadline for Chrysler to come up with a viable business plan, according to the administration, which said Chrysler would attempt to finish its overhaul in bankruptcy court.