A federal bankruptcy judge overseeing Chrysler’s restructuring on Wednesday denied a motion filed by angry creditors that could have significantly delayed the sale of the embattled car maker’s assets to a new entity led by Fiat.

A group of three Indiana pension funds holding Chrysler bonds argued that their rights had been violated when the Obama administration offered the United Auto Workers union better terms in the restructuring. 

Lawyers for the funds had asked for a continuance that would have delayed the sale, but Judge Arthur Gonzalez denied the request. 

A group of 300 Chrysler dealerships who also feel they got a raw deal were also seeking to delay the proceedings.

Chrysler, which filed for bankruptcy protection on April 30, needs the court’s approval to sell itself to a “New Chrysler” owned by the U.S. and Canadian governments, Chrysler’s unions and the Italian car maker Fiat.

Gonzalez is widely expected to approve the sale as early as today.

Check out our Chrysler page for the latest news and videos on the struggling auto company.

Fueling that belief is confirmation that outgoing Chrysler Chief Executive Robert Nardelli is scheduled to appear in court today. In a memo obtained by FOX Business Network, Nardelli told his employees that the sale is "the key and final step prior to formation of our new company."

Nardelli added in the memo: "With the support of the U.S. and Canadian governments, the UAW and CAW, our suppliers and dealers, this new company will be well positioned to move forward as a strong, financially sound automotive company serving our customers with a broader and more competitive lineup of environmentally friendly, fuel-efficient, high-quality vehicles."

The pension funds have argued that the government is trying to jam the sale through bankruptcy court and by doing so have trampled their rights.

The pension funds have said they paid about 43 cents on the dollar in August 2008 for their portion of Chrysler’s $6.9 billion in senior secured debt and that the government is improperly offering them just 29 cents, while giving much bigger payouts to more junior creditors, such as the union.

Chrysler’s attorneys, as well as lawyers for the U.S. and Canadian governments, have countered that the deal with Fiat is the company’s only hope to avoid being sold off piece by piece in a liquidation sale.

They say if the deal doesn’t close by June 15, Fiat could back out.

In testimony Wednesday in federal court in lower Manhattan, former Chrysler President Tom Lasorda said he and other company executives played no favorites when deciding how much investors would receive as part of the restructuring. "We were making decisions to save the enterprise. That's what we're paid to do," he said, 

When Chrysler filed for bankruptcy last month, the government estimated the company would exit bankruptcy in 30 to 60 days. The auto maker is nearing the end of the process and is expected to emerge from court protection closer to the 30-day timetable.