NEW YORK - The Supreme Court yesterday cleared the way for Chrysler's partnership with Italy's Fiat, rejecting an appeal by a trio of Indiana pension and contruction funds, consumer groups and others to block the automaker's sale.

The sale of Chrysler LLC's assets to Fiat Group SpA had been expected to close more than a week ago, but Supreme Court Justice Ruth Bader Ginsburg's Monday decision to delay the sale while studying an appeal by the Indiana state funds threatened to derail Chrysler's restructuring plans.

A federal appeals court in New York had earlier approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene. The Indiana funds, which hold less than 1 percent of Chrysler's secured debt, claim the sale unfairly favors Chrysler's unsecured stakeholders such as the union ahead of secured debtholders like themselves.

Justice Ginsburg ordered a temporary delay just before a 4 p.m. deadline on Monday. Chrysler, Fiat and the Obama administration warned that the high court's intervention could scuttle the sale, which faced a June 15 deadline after which Fiat could exit the arrangement.

Early yesterday, the pension plans seized on comments from Fiat officials that they would not walk away from the deal even if June 15 were to pass without completing the sale. The plans tried to persuade the justices that there was no reason to rush to meet that deadline. But Chrysler, Fiat and the Obama administration stressed in response that Chrysler was losing $100 million every day its plants remain closed and that the deal would automatically terminate in less than a week, with no guarantee that a new agreement would be reached.

If the closing is delayed by more than 10 days, the government will need to "either to increase its overall funding to the detriment of taxpayers, or abandon its role in the transaction," the administration said.

Late yesterday, the Supreme Court turned down the opponents' last-ditch bid. The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.

"The applicants have not carried that burden," the court said.

The court did not consider the merits of the opponents' arguments, only whether to hear their full-blown appeal.

Also yesterday, a bankruptcy judge approved Chrysler's plan to terminate 789 of its dealer franchises. *