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US Government considers bankruptcy protection for GM and Chrysler

The US Government is considering the possibility of placing Chrysler and General Motors in Chapter 11 bankruptcy protection.

This would help safeguard the £11.7billion in loans extended to the carmakers, reports The Daily Telegraph.

It is understood the move is one of a range of options being considered by US Government advisers, and ensure taxpayers would be paid out first if either company collapsed.

Chapter 11 allows a company to undertake rigorous restructuring measures while protecting it from creditors.

However both carmakers have in the past said a move into Chapter 11 would be unhelpful, as customers would lose confidence and many suppliers would stop working with them. 

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