Chrysler was America's #3 automaker. The 2008 crisis bankrupted it in 30 days.

Chrysler was founded in 1925 by Walter Chrysler and grew to become one of the Big Three US automakers alongside General Motors and Ford. By 2008 it was the smallest of the three, selling roughly 1.5 million vehicles per year in the US. The 2008 financial crisis devastated the auto industry — US vehicle sales fell from 16.1 million in 2007 to 10.4 million in 2009 — and Chrysler, already the weakest of the Big Three, ran out of cash first.

In December 2008, the Bush administration extended $4.5 billion in TARP loans to Chrysler after its CEO Robert Nardelli testified that the company would run out of money within months. The Obama administration created an auto task force led by Steve Rattner that demanded Chrysler reach a restructuring deal with creditors, unions, and dealers by 30 April 2009 or lose further support. The company could not reach a unanimous agreement — hedge fund creditors holding $300 million of $6.9 billion in secured debt refused the government's proposed 29-cent-on-the-dollar settlement.

Chrysler filed for Chapter 11 bankruptcy on 30 April 2009 in Manhattan federal court. The plan was a pre-arranged 'surgical' bankruptcy: assets would be sold under Section 363 in 30–60 days. The US provided $3.5B in debtor-in-possession financing, up to $8B total. Fiat contributed its small-car platforms and engine technology for a 20% stake. The UAW retiree trust took 67.7%. The US and Canadian governments held the rest. The Indiana State Police Pension Trust appealed the sale to the Supreme Court, which denied the stay on 9 June 2009.

The sale to New Chrysler closed on 10 June 2009 — 42 days after filing. The federal government ultimately financed the deal with $6.6 billion in total and recovered $5.3 billion when Chrysler shares were sold, for a net loss of $1.3 billion. Chrysler merged with Fiat in 2014 to form Fiat Chrysler Automobiles, which was then acquired by PSA Group in 2021 to form Stellantis. The 789 US dealerships that lost their contracts in the bankruptcy became a symbol of the human cost of the auto bailout — many had been family businesses for generations.