June 9 (Bloomberg) -- Chrysler LLC creditors won what may prove to be a fleeting victory in their drive to stop the automaker’s planned sale of its best assets to a group led by Italy’s Fiat SpA.

A U.S. Supreme Court order yesterday delaying the sale provided no assurance that the court will grant the creditors the longer postponement they seek or even consider the merits of their arguments. Justice Ruth Bader Ginsburg’s stay, issued minutes before a 4 p.m. deadline, blocked the sale “pending further order” from the justices.

“This is purely a temporary holding action,” said Tom Goldstein, a Washington lawyer at Akin Gump Strauss Hauer & Feld LLP whose Scotusblog Web site tracks the court.

Chrysler, based in Auburn Hills, Michigan, said in court papers that the bankruptcy sale, backed by the Obama administration, is necessary to stanch losses of $100 million a day. The company said the longer delay sought by the creditors would put the deal in jeopardy, though Fiat Chief Executive Officer Sergio Marchionne said in an interview yesterday that his company was committed to the purchase.

“We would never walk away,” Marchionne said when asked whether Fiat would pull out of the deal if it isn’t completed by a June 15 deadline set by Fiat. “Never.”

Driving the Timing

Marchionne’s comments show the Supreme Court has time to consider the sale to Fiat and shouldn’t rush to judgment as the bankruptcy and appeal courts have done, lawyers for the Indiana pensioners who oppose the sale said in a filing today with the high court.

“Whether or not the arguments and testimony” used by Chrysler to speed progress of the deal are true, the “risk of termination by Fiat if the transaction does not close by June 15 no longer provides a basis for driving the timing of these proceedings,” the filing said.

Fiat would acquire the Jeep, Chrysler and Dodge brands in a spinoff designed to make Chrysler more competitive.

A federal bankruptcy judge approved the plan and allowed the sale. A U.S. appeals court in New York upheld that decision, while putting its ruling on hold until 4 p.m. New York time yesterday to let opponents seek Supreme Court intervention.

The Chrysler case may influence the reorganization of General Motors Corp., which plans a similar quick sale of its best assets. Chrysler and Detroit-based General Motors have taken around $25 billion in federal bailout loans and want about $40 billion more to complete their reorganizations.

Secured Creditors

The Indiana state pension funds challenging the Chrysler plan bought secured company loans for $17 million and would receive $12 million under the Fiat plan, court papers show.

The funds contend the sale violates their rights as secured creditors. They also argue that the use of government money to help Chrysler violates the Troubled Asset Relief Program, which they say was intended for financial institutions, not carmakers.

“Whatever the ultimate outcome, we are today extremely pleased that the high court has indicated that more time will be given to the consideration of this transaction and the legal issues it raises,” the funds’ lawyer, Thomas E. Lauria of White & Case LLP in New York, said in an e-mail.

The funds are seeking a stay that would last until the Supreme Court decides whether to consider the merits of their appeal, known as a petition for certiorari. They directed their request to Ginsburg, the justice who handles emergency matters from the New York federal appeals court.

Ginsburg Options

Ginsburg could refer the matter to the full high court. Five of the nine justices then would have to agree for the court to issue a longer stay of the 2nd Circuit ruling.

A group of accident victims and consumer-protection advocates are also asking the high court to delay the Fiat sale. Two of those groups, Public Citizen and the Center for Auto Safety, said they were heartened by Ginsburg’s interim step.

“Today’s order indicates that Justice Ginsburg, and, indeed likely the entire court, is taking a hard look at our arguments that the bankruptcy sale violates the rights of crash victims,” the two Washington-based groups said in a statement.

Still, legal experts questioned whether the court ultimately would intervene to block the sale.

“Once the Supreme Court is able to review the certiorari petitions and responses, I doubt the court will maintain the stay,” said Dewey & LeBoeuf LLP partner Martin Bienenstock, who has advised General Motors Corp. and Chrysler Financial Corp. on restructuring.

Short Order

The Supreme Court may resolve the case in short order, Goldstein said. The justices “will feel like it’s super- important not to hold things up unnecessarily if they are ultimately going to deny a stay,” he said.

Should the court decide to take the case and consider it in full, that might lead to a worst-case scenario that Chrysler has warned would end in its liquidation instead of the planned alliance with Fiat.

“The world hasn’t ended yet; we are just one step closer,” said John Wolkonowicz, an automotive analyst with IHS mGlobal Insight Inc. in Lexington, Massachusetts. “The worst thing for the Obama administration is for this whole thing to unravel. So I have to assume they are going to do whatever they can to prevent that from happening.”

The Supreme Court case is Indiana State Police Pension Trust v. Chrysler, 08A1096.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: June 9, 2009 10:56 EDT