Really, the way out of the Chrysler fiasco in the US has come to this.
First Daimler walked away when they realised that Chrysler makes no vehicles that are of any good quality or wanted in the market. Then the Private Equity players stepped in and now they have been burnt too (they are called Cerebus, you would have expected this with this name - see picture).
Now the US Government has stepped in to save this company. it's finance firm is shot, it makes awful vehicles and lots of the now not to popular SUV's.
In a last throw of the dice the US Government is offering to try and partially bail the bondholers (paying one third of the value of their bonds) and merging the company with Fiat. Fiat thinks its small underpowered cars like the Punto are a great story for the US market. Plus it can introduce the Alfa brand back into the US. This is pure genius, I can't see any downside myself.