UPDATE 4-Judge approves bidding procedures for Chrysler

The company's net cash balance has fallen to $260 million, from $1.34 billion over the last three months, said Robert Manzo, of Capstone Advisory Group, which is advising Chrysler.

The ruling came over the objections of a lender group, which had asked the court to block Chrysler's efforts to sell itself, or modify its bidding process to make it more competitive. They said the current sale procedures preclude anyone but the government from being able to bid on Chrysler's assets.

But courtroom testimony demonstrated that "the bidding procedures are intended to encourage bidding from any interested party," said Judge Gonzalez.

BREAKUP FEE

Chrysler also asked the court to approve a $35 million breakup fee paid to Fiat should a better offer for Chrysler emerge. The request was approved.

Earlier in the hearing, Judge Gonzalez ruled that a small group of Chrysler's lenders who have objected to the Obama administration's plan for a quick dash through bankruptcy must identify themselves, in spite of death threats.

"These lenders do not have grounds for (their identity) statement to be sealed," Gonzalez said at the court hearing, saying threats on the Internet did not meet the bar for such a request and that concerns about reputational harm were not subject to protection by the court. The ruling opens the possibility that some may change their minds.

LENDERS OBJECTIONS

Chrysler's first-lien lenders were owed a collective $6.9 billion stemming from the automaker's breakaway from Daimler AG (DAIGn.DE) in 2007. About 70 percent of the debt was held by the four large banks, all of which received support under the U.S. government Troubled Asset Relief Program.