updated 5/29/2009 9:44:31 PM ET 2009-05-30T01:44:31

A bankruptcy judge said he will rule by Monday on whether Chrysler can sell most of the company to a group headed by Italy's Fiat.

U.S. Judge Arthur Gonzalez heard 11 hours of testimony and arguments Friday following marathon sessions the two previous days.

Chrysler says the only way it can avoid liquidation is through a deal where it would sell most of its assets to a group lead by Fiat Group SpA and create a new company.

But attorneys for a trio of Indiana state pension and construction funds opposed the sale, saying that Chrysler's secured debtholders deserve more than the $2 billion that was offered for their $6.9 billion in debt.

If Gonzalez approves the sale, the funds are expected to appeal. .

Chrysler claims that any delay could push Fiat to back out if the deal, since it's set a deadline of June 15 to wrap up a transaction.

If the sale ultimately goes through, the automaker could emerge from Chapter 11 bankruptcy protection within weeks, defying observers who said that the company could linger under court oversight for years.

Chrysler filed for Chapter 11 April 30.

Under that section of the bankruptcy code, companies are freed from the threat of creditors' lawsuits while restructuring their finances. They continue to run and, unlike Chapter 7, don't end up liquidating their assets.

Attorneys for the Auburn Hills, Mich.-based automaker say that with the help of Fiat and its technology, a leaner Chrysler could shift more easily to building smaller, more fuel-efficient cars.

The Indiana funds are fighting the sale, saying that as secured lenders they shouldn't be forced to take such a large loss on their investment and deserve more. The funds hold $42.5 million, or about 1 percent, of Chrysler's total $6.9 billion in secured debt. They bought the debt in July 2008 for 43 cents on the dollar.

In the days leading up to Chrysler's filing for bankruptcy protection, most of the bondholders agreed to a deal that would give them a combined $2 billion to erase the debt, but some of them balked and the deal fell through, forcing the company into a reorganization in bankruptcy court.

Like the funds, many Chrysler dealers, bondholders and former employees have filed objections to the sale and say they are being steamrolled by the exceptionally quick bankruptcy court proceedings.

Friday's court hearings got going with testimony from a trio of Chrysler dealers slated to lose their franchises as part of Chrysler's restructuring. Chrysler wants court approval to terminate the franchises of about 789 of its dealers, calling it a needed cost-cutting measure.

The hearings followed two marathon court sessions including a Thursday hearing that went until almost midnight.

Richard Mealey, president of Birmingham Chrysler Jeep in Troy, Mich., said that if the judge approves the termination of the dealer franchises, he expects to layoff most of his 89 employees at the end of next week, with the rest staying on to keep the body shop open and help wind down the rest of the business.

"We feel totally rejected, dejected and very, very concerned about the future," Mealey said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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