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Chrysler LLC will file for Chapter 11 bankruptcy protection in a New York court Thursday senior Obama administration officials said, kicking off what the administration predicts will be a 30- to 60-day restructuring for the third-largest U.S. auto maker.

The U.S. government will provide up to an additional $8 billion in aid, including up to $3.5 billion in so-called debtor-in-possession financing, to ensure Chrysler survives the historic reorganization process and finalizes a partnership with Italian auto maker Fiat SpA (FIATY).

The administration had hoped to keep the car maker out of court but decided it was the only option after a deal to cut the company's debt was rejected late Wednesday by several of the company's lenders, a senior administration official said. President Barack Obama is set to deliver remarks on the matter at noon.

An administration official said Thursday a "stronger" Chrysler would emerge "with a balance sheet and a set of liabilities that are sustainable."

"Our goal is to have this bankruptcy be short and completed quickly," with a stronger Chrysler emerging, the official said. "The court in New York has a vast amount of experience in this area and we felt that that would be the most effective."

In exchange for the aid, the U.S. government will 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 U.S. government would have the power to appoint board members at the new company but would not get involved in day-to-day operations, the administration official said.

The bankruptcy filing is part of an agreement brokered during the past month by the Treasury Department that will finalize a partnership between Chrysler and Fiat. Fiat's 20% stake could increase to 35% if the new company meets benchmarks intended to ensure the development of fuel-efficent vehicles in the U.S.

Officials said there are no plans for further job losses at Chrysler, but said that Chrysler's base of dealers will shrink over time.

Also as part of the deal, Chrysler's lending arm, Chrysler Financial, will be folded into GMAC LLC, which will become the main financing source for all Chrysler vehicles.

Administration officials said they expect a "surgical" bankruptcy process for Chrysler, with much of the groundwork for a reorganization already laid by Obama's auto industry task force.

That groundwork includes a cost-cutting deal ratified by the United Auto Workers union late Wednesday. Another Treasury-brokered agreement calls for Chrysler's lenders to accept $2.25 billion in cash in exchange for wiping out about $6.9 billion of Chrysler's debt. Some creditors balked at that offer. But the administration official said Thursday that he expects those agreements to be kept largely in tact by a bankruptcy judge.

The new government loans include between $3 billion to $3.5 billion in so-called debtor-in-possession financing and an additional $4.5 billion once the company emerges from court, administration officials said Thursday morning.

-By Josh Mitchell and Henry J. Pulizzi, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com