Chrysler LLC will file for chapter 11 bankruptcy protection, the Obama administration confirmed on Thursday, after the struggling car manufacturer failed to reach a deal with its creditors.

The administration predicts the restructuring will take between 30 and 60 days to which the U.S. government will provide an additional $8 billion in aid. The company’s CEO Robert Nardelli also said that he will be leaving the company when it emerges from bankruptcy.

The U.S. government will in exchange for the aid take a small equity stake in the new company, which will be partly owned by Fiat.

According to a White House fact sheet, the U.S. Treasury will hold 8% of the reorganized company, while Fiat would hold 20% and the governments of Canada and Ontario would receive 2%.

The President said in a statement that although the majority of debt holders agreed to a taking huge cuts in their stakes, dropping from $6.9 billion down to $2 billion; smaller debt holders were not willing to lose so much.

At the same time, Chrysler entered into a partnership with Italian auto maker Fiat SpA, Mr. Obama said in the noon address. This partnership will not only help Chrysler survive but also help it to “thrive” according to President Obama.

The deals give Chrysler a new lease on life, President Barack Obama said.