In an order Tuesday, U.S. Bankruptcy Judge Arthur Gonzalez in Manhattan found the sale order should be heard by the Second Circuit, skipping the usual path of having the case first reviewed by a U.S. district judge. Gonzalez approved the sale late Sunday.

The judge found that skipping the district-court level “is appropriate
because this case involves a matter of public importance, and an immediate appeal may materially advance the progress of this case.”

The deal must close by June 15.

“We are pleased that any appeal of the Judge’s approval of the sale will be heard by the Second Circuit Court of Appeals, enabling a resolution at the earliest opportunity,” said Shawn Morgan, a Chrysler spokeswoman. “Given the enormity of the situation and the fact the any delay in the closing is costing $100 million a day, we look forward to completing the transaction with the new company formed through the alliance with Fiat as quickly as possible.”

In a final order issued late Monday, Gonzalez granted Chrysler’s request to limit the automatic stay period for an appeal. The judge ruled the sale order would become effective at 12 noon Friday, allowing Chrysler to close the sale then.

Chrysler had asked that the sale be allowed to go forward at 9 a.m. EDT Thursday.Typically, an automatic 10-day stay is granted for bankruptcy appeals, unless it is shortened by the presiding judge.

Indiana pension funds – the Indiana State Teachers Retirement Fund, the Indiana State Pension Trust and the Indiana Major Moves Construction Fund – filed a notice of appeal Monday, saying they intended to appeal to this district court. Chrysler separately asked Monday that the case go directly to the circuit court.

The Indiana funds have argued the sale of Chrysler is unconstitutional,
saying the plan upends the rights of senior lenders to be paid off before junior creditors. The Indiana funds own about $42 million of the company’s senior debt.

The Indiana funds also contend that the U.S. Treasury Department doesn’t have the authority to lend bankruptcy financing under the Troubled Asset Relief Program because Chrysler isn’t a financial company.Under Chrysler’s plan, Fiat would initially own 20% of the new company, though it would have the option of increasing its stake to as much as 51%. The United Auto Workers union would initially get a 55% stake, while the U.S. and Canada, which are lending Chrysler $4.9 billion during the bankruptcy, would own 8% and 2%, respectively.

Senior lenders owed $6.9 billion would receive $2 billion, giving them a
recovery of about 29 cents on the dollar. The Indiana funds say that, under Chrysler’s plan, creditors with less seniority, namely the UAW, would see a better recovery. The UAW’s health-care trust has an unsecured claim against Chrysler for about $10.5 billion. In addition to the equity stake in Chrysler that the trust would receive, it would
also get a $4.5 billion note.