Chrysler won a big victory yesterday when a federal bankruptcy judge approved the sale of most of the Detroit automaker's assets to Italy's Fiat Group SpA.

Although there will still be details to work before the company can actually emerge from bankruptcy reorganization, the judge's approval moved the company closer to a successful conclusion.

One potentially large stumbling block still must be cleared up. An appeal filed by a trio of Indiana state pension and construction funds claims the ruling by Judge Arthur Gonzalez sets aside the rights of the company's secured lenders while doling out assets to others.

Judge Gonzalez said in his ruling late Sunday that a speedy sale -- the centerpiece of a restructuring plan backed by President Barack Obama's automotive task force -- was needed to keep the value of Chrysler from deteriorating and would provide a better return for its stakeholders than if it had chosen to liquidate.

"Any material delay would result in substantial costs in several areas, including the amounts required to restart the operations, loss of skilled workers, loss of suppliers and dealers who could be forced to go out of business in the interim, and the erosion of consumer confidence," Judge Gonzalez wrote in his opinion.

The sale to Fiat means Chrysler could be out of bankruptcy within the government's original time frame of 30 to 60 days.

Chrysler's plan gives a 55 percent stake of the new company to a union-run trust for retirees. Fiat gets a 20 percent stake that could grow to 35 percent. The U.S. and Canadian governments get smaller pieces.

President Obama yesterday expressed elation, saying it "paves the way for the new Chrysler to successfully emerge from bankruptcy as a new, stronger, more competitive company for the future."

Company officials hope this works, too. "With this approval, the new Chrysler Group is created and can prepare to launch as a vibrant new company formed with Fiat," Robert Nardelli, Chrysler's outgoing chairman and chief executive, said in a statement.

Mr. Nardelli is slated to leave Chrysler once the sale is final.

"While this has been an extremely difficult chapter in Chrysler's history for all involved, the new company and its customers, employees and suppliers can now begin on a fresh page," Mr. Nardelli said.

Still, some observers see the bankruptcy proceedings for GM and Chrysler as an ominous signal for the United States -- a sign that a dramatic change in direction under way for the global auto industry.

"The General Motors bankruptcy coupled with the Chrysler bankruptcy signal that the once-dominant position of the North American automakers in the global auto market is officially at an end," said Jack Nerad, editorial director of Kelley Blue Book.

By virtue of the ruling, Chrysler and Fiat will get what each has wanted for so long -- access to markets other than those of their home countries. That ability to develop partners overseas is considered to be the price of entry in the current global marketplace.

As with most global automotive companies, the new pairing will allow the companies to share platforms, equipment, staff and other assets in developing new products.

Doing so will save each company both time and money. That's important because most car companies nowadays find it necessary to renew their products every three years now instead of every five or six in order to respond to lightning quick market changes.

The ruling came just ahead of fellow U.S. automaker General Motors Corp.'s government-backed bankruptcy protection filing yesterday. GM filed for Chapter 11 in New York's Southern District early yesterday.

Judge Gonzalez's ruling came after three marathon days of testimony last week, during which everyone from Chrysler's outgoing chief executive to dealers slated to lose their franchises took the stand.

Chrysler has maintained that selling the bulk of its assets to Fiat Group SpA was the only way it could avoid selling itself off in pieces. In exchange for a stake in the new Chrysler, Fiat has agreed to share with it technology needed to create smaller, more fuel-efficient vehicles.

With the approval of the sale, Chrysler could emerge from Chapter 11 bankruptcy protection as soon as this week.

The Indiana funds, which own $42.5 million of Chrysler's $6.9 billion in secured debt, aggressively objected to the sale, saying it did not provide a big enough return for secured debtholders, while paying off unsecured stakeholders.

Indiana State Treasurer Richard Mourdock said he was "disappointed but not surprised" by Judge Gonzalez's ruling. He said the state's attorneys would appeal the case to U.S. District Court. "The court is determined to rewrite 150 years of law defining 'secured creditor,'" Mr. Mourdock said in a statement. "It saddens me to see government conducted in this manner."

The Indiana funds bought their debt in July 2008 for 43 cents on the dollar.

Chrysler has said that any delay could cause the deal with Fiat to crumble. The Italian automaker has the option of pulling out if the sale does not close by June 15.

As part of Chrysler's restructuring plan, a UAW retiree health care trust will receive a 55 percent stake in the new company, while Fiat will get a 20 percent stake that can increase to 35 percent. The remaining 10 percent of the company will be owned by the U.S. and Canadian governments.

The company also is moving 789 dealerships around the country, including a number in Western Pennsylvania, effective June 9.

In the days leading up to Chrysler's Chapter 11 filing, the automaker struck a deal with the majority of secured lenders to give them $2 billion in cash, or 29 cents on the dollar, to erase the $6.9 billion in debt. But some of the debtholders balked, and the automaker was forced to file for bankruptcy protection on April 30.