The sale of Chrysler's assets to a new company includes Fiat will happen on Monday after expectations that it would be resolved late last week were dampened after many of the objections were not dealt with before the weekend loomed. In the New York Bankruptcy Court, Judge Arthur Gonzales said yesterday that he would give his opinion if a sale of Chrysler's assets could go ahead "sometime Monday".

The court has been wading through more that 300 objections to the sale that were lodged with the Manhattan court, most of which have now been resolved or dismissed. However several key objectors remain to be dealt with, and these include a group of Indiana state pension and construction funds that hold secured debt, as well as objections from the 789 Chrysler dealers - a quarter of the total - that are losing their franchises during the bankruptcy process. Lawyers for the objectors had presented all their closing arguments by 9:30 PM last night after a marathon session, leading Judge Gonzales to consider the validity of their arguments over the weekend.

The key secured lenders have settled for a US$2 billion payout from the U.S. Treasury Department whittled down from an original debt of US$6.9 billion; these lenders are being represented in court by JP Morgan Chase Co. However attorney's for the state pension funds argued yesterday that the rapid timetable of the bankruptcy procedure was pushing them to one side and violated the Constitution and that using funds from the Troubled Asset Relief Programme (TARP) to prop up Chrysler broke its terms as TARP was only passed by Congress to provide support for failing financial institutions. "Congress made it absolutely clear it wouldn’t allow Treasury to fund an auto bailout," Glenn Kurtz, representing the pension funds, told Gonzalez yesterday. "It violates the Constitution and it violates TARP."

Assistant U.S. Attorney Jeanette Vargas told the court that it was "no secret" that TARP money was being used to support Chrysler but that Congress retained oversight of how the funds were spent. "It certainly wasn’t the government that drove Chrysler into bankruptcy," Vargas told the court yesterday. "Chrysler came to the government" and they wanted to see a viable business plan before lending any funds. Fiat's was the only offer on the table for Chrysler. Chrysler's outgoing CEO Bob Nardelli had told the court that they had had no choice but to approach the government for a financial lifeline In testimony to the court last week he said that the carmaker had been in robust shape until the first half of last year, but he went on to note that last summer "the roof fell in, or the bottom fell out. It's almost like someone flipped a switch."

With Chrysler's 22 factories idled and its almost 27,000 workers laid-off since the failed carmaker entered Chapter 11 on May 1, there is a rush to get the new company into action. Corinne Ball, a lawyer for Chrysler, likened the deal to a leveraged buy-out by Fiat and the United Auto Workers. "There was no and is no other alternative but liquidation," Ball said to Gonzalez. "No one in the market would be doing for us what this LBO is doing." If the court approves the sales of assets, it will then have to deal with the remaining eight plants that aren't wanted by the new company.