Chrysler L.L.C. can no longer keep its creditors at bay.

According to The New York Times, the inevitable bankruptcy of the number three U.S. automaker will come as soon as next week. The Treasury Department has an agreement in principal with the United Auto Workers, and an agreement with Italy's Fiat SpA will be completed while the company is in bankruptcy protection, the paper says.

As Bloomberg News noted, things are not going so well for Fiat either. S&P recently cut the company's debt ratings to junk. Fiat also reported its first quarterly loss since 2004 today and Chrysler's bankers want the company to invest $1 billion in the struggling U.S. company.

Among the questions yet to be answered is how badly holder's of the automakers' $6.9 billion in debt will be shafted.

"The government's most recent offer, presented Wednesday, would give the company's lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler," the paper said. "Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake."

Of course, the real loser in all of this is Cerberus Capital Management which took over Chrysler from its former German corporate parent Daimler AG. Cerberus will likely see its equity stake wiped out. Robert Nardelli, the disgraced former CEO of Home Depot Inc. (HD) who was brought into run Chrysler, will likely lose his job as well.

More workers will be displaced, plants will be closed and dealerships will be shuttered. The bankruptcy will one be of the ugliest in U.S. history.

Unfortunately, it may be a hint of things to come from General Motors Corp. (GM).

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