June 8 (Bloomberg) -- Chrysler LLC’s planned asset sale to a group led by Italy’s Fiat SpA was delayed by Justice Ruth Bader Ginsburg while the U.S. Supreme Court considers a request for a longer postponement that might scuttle the deal.

Moments after her order was issued, Fiat Chief Executive Officer Sergio Marchionne said in a telephone interview that the company will “never” walk away from the deal. The company previously set a June 15 deadline for completion.

A federal appeals court in New York last week allowed the sale, while putting its decision on hold until 4 p.m. today to let opponents including Indiana pension funds seek Supreme Court intervention.

Ginsburg’s one-sentence order today said the bankruptcy court orders allowing the sale “are stayed pending further order” of the Supreme Court. That language leaves open the possibility that the justices might clear the deal to go forward in the next several days.

Chrysler said in court papers that the sale is necessary to stanch losses of $100 million a day. Chrysler said the sale, which would transfer its Jeep, Chrysler and Dodge brands, would help save 38,500 jobs, plus those of workers at its suppliers.

The pension funds sought a stay that would last until the full nine-member court decided whether to hear their appeal. The funds said in court papers they would suffer “irreparable harm” should the sale go forward.

‘Kill’ the Sale

Chrysler said the sort of stay sought by the funds “will, in practical effect, kill the Fiat sale and lead to a liquidation.”

The Obama administration, which is supporting the automaker at the Supreme Court, played down the impact of Ginsburg’s order. An administration official who spoke on condition of anonymity said the stay is intended to give the court enough time to make a determination on the merits of the request.

The stay will probably be brief, said Dewey & LeBoeuf LLP partner Martin Bienenstock, who has advised General Motors Corp. and Chrysler Financial Corp. on restructuring. “Once the Supreme Court is able to review the certiorari petitions and responses, I doubt the court will maintain the stay,” he said. “Certiorari” refers to the process of seeking Supreme Court review of a case.

“Pending further information from the Court, we have no comment at this time,” said Lori McTavish, vice president of public relations for Chrysler, in a e-mail.

The Indiana pension funds hold $42.5 million of $6.9 billion in Chrysler secured loans.

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

To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Tiffany Kary in New York Bankruptcy Court at tkary@bloomberg.net.

Last Updated: June 8, 2009 18:51 EDT