U.S. top court delays Chrysler sale

By James Vicini and Poornima Gupta

WASHINGTON/DETROIT (Reuters) - The sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA (FIA.MI) was temporarily blocked by a U.S. Supreme Court justice on Monday, with no indication how long the delay would last.

In a one-sentence order, Justice Ruth Bader Ginsburg said the bankruptcy judge's orders allowing the sale "are stayed pending further order" by her or by the Supreme Court. It was unclear what the next step would be.

Ginsburg acted right before a 4 p.m. EDT (9 p.m.) deadline from a U.S. appeals court in New York. The end of the appeals court order would have allowed Chrysler to proceed with its Obama administration-backed sale to Fiat, a union-aligned trust and the U.S. and Canadian governments.

Both Chrysler and the Obama administration have said a long delay could kill the deal and end up with Chrysler's liquidation. Fiat can walk away from the deal if it does not close by June 15.

The Chrysler case could set a precedent for General Motors Corp GMGMQ.PK, which is using a similar quick-sale strategy in its bankruptcy in New York.

Jerry Reisman, a lawyer in New York said, "Unless Chrysler is allowed to reorganize and sell its assets to Fiat, GM will certainly face the same type of opposition from objecting creditors which will doom GM's reorganization."

Chrysler had no immediate reaction to the high court delay. "Pending further information from the court, we have no comment at this time," a spokesman said. The U.S. Treasury Department, which oversees the administration's autos task force, also had no immediate comment.

Indiana pension funds and consumer groups had asked the Supreme Court over the weekend to stop the sale of Chrysler so they could challenge the deal in an appeal to the nation's highest court.