Chrysler hearing adjourned until Thursday

May 27, 2009 6:27:42 PM PDT
After about nine hours of testimony, a bankruptcy court judge in New York has adjourned a hearing on Chrysler's plan to sell most of its assets to Italian automaker Fiat. The company is waiting to see whether Judge Arthur Gonzalez will approve the sale despite protests from a group of Indiana state pension and construction funds that hold less than 1 percent of Chrysler's secured debt. If Gonzalez OKs the sale, the automaker could emerge from bankruptcy within weeks.

Attorneys for Chrysler say unloading the assets to a group led by Italy's Fiat Group SpA is the company's only hope to avoid selling itself off piece-by-piece. They say a leaner Chrysler could shift more easily to smaller, more fuel-efficient cars.

But many Chrysler dealers, bondholders and former employees say they are being steamrolled by the bankruptcy proceedings. Fiat could back out if the deal doesn't close by June 15.

The hearing resumes tomorrow. It could stretch through Friday.

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