High Court Asked to Block Chrysler Sale

The appeals court halted the sale on Tuesday, allowing the funds to appeal Gonzalez's decision. That court ruled against the funds on Friday, but continued to delay the sale so the funds could go to the Supreme Court.

Chrysler had hoped to close the sale by the end of this past week.

Auburn Hills, Michigan-based Chrysler has maintained that the sale must be completed quickly to save the automaker from complete collapse. If the deal does not close by June 15, Fiat has the option of pulling out. Production at Chrysler's manufacturing plants remains halted pending the closing of the sale.

Chief Judge Dennis Jacobs of the New York-based appeals court asked Thomas Lauria, the lawyer representing the Indiana funds, why he believed his clients would be better off if the deal with Fiat went away and Chrysler was forced to liquidate.

"You can't wait for a better deal to come in from Studebaker," Jacobs said.

Lauria responded that the sale could be restructured to provide a better return for the secured debtholders.

U.S. automaker Studebaker Corp. closed in 1963.

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AP Auto Writer Bree Fowler contributed to this report.

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