NEW YORK — A federal bankruptcy judge approved the sale of most of Chrysler LLC’s assets to Italy’s Fiat, moving the American automaker a step closer to its goal of a quick exit from court protection.

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

No news is good news these days when it comes to Chrysler Dodge Jeep – The company is expected to announce later today the closing of 789 dealerships by early June 2009.

According to the AP: “Kathy Graham, spokeswoman for Chrysler, said there is no confirmed time, but expects the company will be releasing important information sometime today, May 14. Chrysler officials said this morning it will cut ties with 789 of its roughly 3,200 dealerships nationwide. Letters are being sent this morning to the affected dealers, according to a memo from the company.

Chuck Smith, owner of Hamilton-Fairfield Dodge-Jeep said he fears his dealership may be on the chopping block due to its small size of 15 employees and small location within Hamilton. “If it happens, we’ll be fine over here, we’ll be taken care of but there are plenty who won’t be,” he said.

General Motors has said it will be notifying dealerships on Friday if it will not renew their contracts, which expire in October 2010. The automaker could drop roughly 1,000 of its 6,000 dealerships nationwide, and it will not give public disclosure as to which may close, said spokeswoman Susan Garontakos.”

According to Automotive News, “Just days after agreeing to take a 20 percent stake in Chrysler, Fiat is expected to announce plans to purchase GM Europe’s core brands of Opel, Vauxhall, and Saab.”

Apparently Fiat has had the hots for Opel these past couple of decades. However, this is the first time the Italian auto maker has made moves towards purchasing a percentage of the O-P. This Superpower of Automotive Worldwide might would consist of Fiat, Lancia, Alfa Romeo, Chrysler, Saab, Opel and Vauxhall. It would be the second largest automaker, selling 6 to7 million vehicles a year and posting annual revenues of $106 billion dollars. Let’s see President Obama stop this one!

The Dodge "Storm Trooper" Avenger

In an interview with Financial Times, Fiat’s Sergio Marchionne said “From an engineering and industrial point of view, this is a marriage made in heaven.” He went on to say that Fiat and Opel could save nearly a billion euros a year by sharing platforms and technology. We’ll stay on top of this one, and continue to praise Fiat and all the good work they are doing, as we await their rise to be our new overlords.

Fiat has decided that picking up a stake in Chrysler on the cheap is a ripe opportunity. And how cheap is that? Real cheap, as in, they don’t have to shell out a dime. Fiat will provide Chrysler with models and the platforms and technology to build them, as well as management services and business cooperation in exchange for what will initially be a 35 percent stake in the company, which may be taken past 50 percent to full ownership at a later date.

Will Fiat be able to exploit Chrysler as a low-cost manufacturing base in the US? Will they revive the Chrysler and Dodge brands and put successful models into dealerships that people will want to buy, despite the stigma of bankruptcy? That’s the multi-billion dollar question.

Chrysler, and the Obama administration which has pushed the company towards a bankruptcy declaration and hopes to usher the automaker through a streamlined Chapter 11 proceeding, says it hopes to emerge from bankruptcy with the proper restructuring done within weeks. If they can pull it off maybe, just maybe, they have a chance at surviving and one day prospering again.

President Barack Obama plans to announce tomorrow that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA, people involved in the matter said.

Administration officials are still resolving outstanding issues, and the plan is not finished yet, said one of the people, who declined to be named. Any bankruptcy filing could come as soon as tomorrow, people familiar with the matter said.

Chrysler’s best assets would be sold to a new entity that would have an ownership structure similar to that envisioned in an out-of-court deal between the Auburn Hills, Michigan-base automaker and Turin, Italy-based Fiat, the people said.

The Italian company would become a 20 percent owner of Chrysler, and a union retiree health-care trust fund would own 55 percent, with the rest of the company staying in the government’s hands initially, people familiar with the matter said.

Chrysler has made progress in out-of-court restructuring, including reaching labor deals with the United Auto Workers union and Canadian Auto Workers on new contracts. Chrysler Chief Executive Officer Bob Nardelli said today in a memo to employees that the company is waiting to hear whether its 46 lenders will agree to take $2 billion in cash to wipe out $6.9 billion in secured debt.