U.S. court seen clearing Chrysler sale to Fiat

By Tom Hals

NEW YORK (Reuters) - Chrysler looks set to clear its last major hurdle in its sprint through bankruptcy court as soon as Thursday, when a judge is expected to overrule more than 340 objections and approve its sale to a group that includes Fiat.

Less than 30 days after it filed for bankruptcy, the automaker seeks approval to sell its stronger operations to a "New Chrysler" owned by Italy's Fiat, labour and the U.S. and Canadian governments, in exchange for $2 billion (1.3 billion pounds) paid to its lenders.

The first eight hours of hearings on Wednesday centred on cross-examining Chrysler's former president and vice chairman, Tom Lasorda, and Robert Manzo of Capstone Advisory Group, which provided Chrysler with financial analysis.

Those opposing the sale include the nearly 800 dealers Chrysler wants to shutter, as well as debtholders and retirees. Suppliers, which are owed more than $5 billion, have also objected.

The sale will complete the White House's goal of reorganizing the automaker in 30 to 60 days, largely thanks to government financing of the bankruptcy and Fiat's role as a buyer. Chrysler shut its operations when it filed for bankruptcy, which lent weight to the argument that sale needed to be approved quickly.

The compressed time frame has forced the court to accelerate hearings and cut notice periods short. Meanwhile, lawyers trying to block the sale had to scramble to gather testimony on Tuesday as the hearing approached.

Chrysler argued the quick sale was critical to preserve the value of its operations, save more than 100,000 auto-related jobs and prevent economic shock waves from sweeping across the Midwest, which is already mired in a deep recession.

The judge said the hearings will continue on Thursday and possibly Friday, as none of the hundreds of objections had been heard yet.