Chrysler will not pay back either the original government bailout loan nor the funds the government provided to maintain operations during bankruptcy proceeding.

One of the company's financial "assumptions" in its bankruptcy filing is that the government will forgive both the original $4 billion loan from the Bush administration, the $300 million fee from the loan and the latest installment of $3.2 billion that the Obama administration provided to prop up the company during bankruptcy.

From CNN Money:
An Obama administration official confirmed Tuesday that Chrysler won't be repaying the loans, though a portion of the bridge loan may be recovered by Treasury from the assets of Chrysler Financial, the former credit arm of the automaker which is essentially going out of business as part of the reorganization.

"The reality now is that the face value [of the $4 billion bridge loan] will be written off in the bankruptcy process," said the official, who added that the 8% equity stake that Treasury will be receiving as part of the company's reorganization is meant to compensate taxpayers for the lost money.

"While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated," said the official.