Fiat, Chrysler prepared to complete deal: source

A Chrysler logo is seen atop a New York City car dealership April 27, 2009.

DETROIT (Reuters) - Fiat SpA and Chrysler LLC are prepared to complete a merger deal by Thursday that would be taken into bankruptcy court as a key element of the U.S. automaker's restructuring plan if needed, a person with direct knowledge of the preparations said.

Chrysler faces a government-imposed deadline of Thursday to wrap up concessions from its unions and a group of lenders that hold $6.9 billion of its secured debt.

The United Auto Workers union was voting on Wednesday on whether to ratify cost-cutting contract terms that would also cut in half the remaining cash portion of Chrysler's $10.6-billion obligation to a trust fund for retiree healthcare.

If some Chrysler lenders reject an offer from U.S. officials to take $2 billion in cash in exchange for debt, a Fiat-Chrysler deal would be part of the plan submitted to a bankruptcy judge, according to the source who spoke on condition of anonymity about the merger discussions.