Chrysler CEO says Fiat deal to close Friday

By Tom Hals

NEW YORK (Reuters) - Chrysler expects to close its sale of most assets to Fiat as early as Friday, its chief executive told a bankruptcy hearing which is considering whether to approve the transaction.

The automaker seeks approval to sell its stronger operations to a "New Chrysler" owned by Italy's Fiat (FIA.MI), labor unions and the U.S. and Canadian governments, in exchange for $2 billion paid to lenders.

Approval would be a victory for the White House, which had been criticized by many bankruptcy specialists for setting a seemingly unrealistic time frame of 30 to 60 days in which to bring the automaker's operations through Chapter 11.

Nardelli was answering lawyers' questions when he mentioned that he expected the sale to close on Friday.

The comment appeared to surprise the attorney who was questioning him, who was representing Indiana pension funds opposed to the Fiat deal.

Tom Lauria of White & Case asked Nardelli if he expected the sale to close with necessary antitrust approval, which he said it did.

During questioning about liabilities being transferred to the New Chrysler, Nardelli pointed out that while the pensions of hourly workers were carried out of bankruptcy, others were not. "Lee Iacocca lost his pension," he said, referring to the automaker's former chairman.

Lawyers opposing the sale said on the sidelines they expect the judge to approve the sale, even though hundreds of objections had yet to be heard. Lauria and other attorneys said they will ask to have the closing postponed to give district court time to hear an appeal.