The Supreme Court's decision could mean Chrysler assembly lines could soon start running again.

The Supreme Court has brushed back what had been viewed as the last potentially serious challenge to the restructuring plan laid out by Chrysler, clearing the way for the bankrupt U.S. makers emergence from Chapter 11, and its takeover by the Italian automaker Fiat.

The plan has been blessed by the Obama Administration, which has pumped billions into Chrysler to keep the company alive, had been put on hold on Monday when Supreme Court Justice Ruth Bader Ginsburg decided to consider an appeal by the guardians of an Indiana state pension fund.  They had argued that lower courts were abrogating traditional bankruptcy law by placing unsecured creditors, such as Chrysler’s unions, in a more favorable position than secured lenders, like the pension fund.

The Court’s stay triggered fear among Chrysler’s backers that the bankruptcy plans might fall apart if the process were to drag out.  The Obama Administration has been pushing for a June 15 deadline, fearing Fiat might walk away from the deal or renegotiation it.  But critics of the plan noted that Fiat CEO Sergio Marchionne said, on Tuesday, that he would not be driven away if that deadline were missed.

Even so, Chrysler has reportedly been losing about $100 million a day while in bankruptcy court – in large part because it doesn’t plan to start its plants back up until it emerges – hastening the need to get it out of Chapter 11.  That led government representatives to insist that they would be forced, within 10 days to “either…increase (the government’s) overall funding to the detriment of taxpayers, or abandon its role in the transaction.”

The urgency of the situation apparently swayed the 9 justices, at least four of whom would have had to agree that a full hearing would be needed, with a reasonable chance the majority would overrule an earlier Appeals Court decision in favor of Chrysler. Late Tuesday, they issued an unsigned opinion declaring, “The applicants have not carried that burden.”

In a separate statement, the White House responded that the court’s decision allows “Chrysler to re-emerge as a competitive and viable automaker.”

The Supreme Court decision was the second half of a pair of favorable rulings coming Chrysler’s way, on Tuesday.  In the New York courtroom where the bankruptcy is being adjudicated, U.S. Judge Arthur Gonzalez approved plans to fire 789 dealers, about a quarter of the automaker’s pre-bankruptcy retail network.

While many dealers have by now agreed to Chrysler’s plans, and are selling off their inventory as quickly as possible, some dealers, including suburban Washington mega-retailer Jack Fitzgerald are still pushing for help and there are several lawmakers considering legislation that would bar the retail network reductions at both Chrysler and General Motors if they are to receive federal aid.  But the odds of getting such a measure through both the House and Senate, and then getting a bill signed by the president seem extremely slim.

Unless another unexpected roadblock appears, secured creditors will receive just 29 cents on the dollar for what had been a combined $6.9 billion in Chrysler debt, once the automaker emerges as the “new” Chrysler Group.  The United Autoworkers Union will hold a 55% stake in that post-bankruptcy automaker, but control will be vested in Fiat, which will eventually hold as much as a 35% stake.  The rest of the stock will be in the hands of the U.S. government.

The Treasury Department, meanwhile, plans to take control of  about 62% of  new General Motors, which is wending its way through a separate bankruptcy case. The Obama Administration has insisted it will not take any steps to interfere with the new GM’s day-to-day operations, though right-wing skeptics have gone as far as threatening a boycott of what some have dubbed “Government Motors.”

With the two automotive bankruptcies creating a number of potentially new precedents, legal experts are closely watching the process unfold.  Already, lawyers in the GM case are citing what happened down the hall to justify their own plan, which would also wipe out billions in secured debt.