Report: Obama Administration Preparing Bankruptcy Filing for Chrysler

The Treasury Department is preparing a bankruptcy filing for Chrysler, the New York Times reports, though it wasn't immediately clear how serious the Obama Administration is about following through with that plan.

The Times, citing sources with knowledge of the process, reports that an agreement was reached with the United Automobile Workers union to protect pension and retiree health care benefits in the planned Chapter 11 filing, which could come next week.

An administration official reached by FOX Business urged caution on concluding a bankruptcy was imminent.

"It should surprise no one that the administration is planning on contingencies, but we remain focused on the goal and engaged with all stakeholders to bring Chrysler and Fiat to a working partnership," the official said.

Chrysler, one of the Big Three U.S. automakers, has been hit hard by the economic downturn and has continued to struggle despite receiving $4 billion in federal aid and despite talk of an alliance with the Italian automaker Fiat. The Obama administration has suggested it would provide more aid to Chrysler if a deal with Fiat were reached to stop the American company from failing.

GM, which has received $13.4 billion in federal loans to stay afloat, also is under continued financial stress and plans to temporarily close 13 of its plants in the United States and Mexico into the summer to save money.

The move is a result of slumping sales, but some analysts and dealers fear the plant closings could further scare car buyers already made nervous by talk of a GM bankruptcy.

GM faces a June 1 deadline to cut its debt, reduce labor costs and take other restructuring steps. If it doesn't meet the deadline, the company's CEO has said it will enter Chapter 11 bankruptcy protection.

Ford is considered to be in much better shape than its two major American competitors, and it has yet to receive federal bailout money.

The Associated Press contributed to this report.