April 24 (Bloomberg) -- The U.S. government is working in an “aggressive” way to get an agreement among Chrysler LLC, Fiat SpA and stakeholders to avoid a bankruptcy next week, President Barack Obama’s chief of staff said.

The talks may come right down to the April 30 deadline, Chief of Staff Rahm Emanuel said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.

Time is dwindling for Auburn Hills, Michigan-based Chrysler to reorganize outside of court protection. It has six days to seal an alliance with Italy’s Fiat, get lenders to agree to cut its debt and reach agreements with the United Auto Workers and Canadian Auto Workers unions on labor cost reductions.

The Treasury Department is preparing a bankruptcy filing for Chrysler as a matter of “due diligence,” Senator Debbie Stabenow, a Michigan Democrat, said yesterday in an interview.

“This is very serious,” she said. “We’re coming down to the deadline.” She was among 10 Democrats from the Michigan congressional delegation who met April 22 with Emanuel and Larry Summers, director of the National Economic Council.

Chrysler, surviving with $4 billion in U.S. loans, must win concessions and create the alliance with Turin, Italy-based Fiat to qualify for as much as $6 billion more in aid.

Retirees’ Meeting

Salaried retirees asked an adviser to Obama’s auto task force in a meeting today about a New York Times report that the Treasury Department is directing Chrysler to prepare a Chapter 11 filing, said Jack Dickinson, who attended the meeting.

The adviser, Ron Bloom, responded “that to his knowledge, that no final arrangements had been made,” said Dickinson, who represents retirees from General Motors Corp., which faces a June 1 deadline to restructure or face bankruptcy.

Chuck Austin, who represents Chrysler retirees, said that Bloom told the group “it is not the case that an agreement has been reached on UAW pensions.”

An administration official, speaking on condition of anonymity, said today it should surprise no one that the government is making contingency plans. The administration remains engaged with all stakeholders to bring Chrysler and Fiat to a working partnership, the official said.

Unions, Lenders

Chrysler was nearing completion of a labor deal with the CAW late yesterday, said Ken Lewenza, president of the Toronto- based union. Chrysler has been seeking to reduce hourly labor costs to C$57 ($47.10) from C$76 to match those of Toyota Motor Corp. in Canada.

Chrysler also has substantially completed negotiations with the UAW on a new labor contract, a person with direct knowledge of the talks said.

The last major obstacle is reducing Chrysler’s bank debt.

A group of lenders holds $6.9 billion in loans secured by the auto company’s assets. The Treasury and the lenders have been trading proposals for reducing the debt. Chrysler is 80 percent-owned by the New York-based investment firm Cerberus Capital Management LP.

GM, carrying $15.4 billion in U.S. loans, is trying to finish a plan this week that may close plants and scrap models as much as four years sooner. The aim is to lower the level of sales required to make a profit as it submits a new debt-cutting proposal to unsecured bondholders as early as April 27, people familiar with the effort said.

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

Last Updated: April 24, 2009 15:25 EDT