Chrysler LLC, under orders from President Barack Obama to complete bankruptcy proceedings as quickly as possible, may ask court approval to auction most of its assets in three weeks, according to reports.

Chrysler said it would ask a judge on Monday to approve the sale, creating an alliance with Italy's Fiat SpA, according to a filing with the US bankruptcy court in Manhattan. The transaction would help create the world's sixth-largest carmaker, a merger Chrysler wasn't able to do outside bankruptcy because of opposition by some of its secured lenders.

The company is asking bankruptcy judge Arthur Gonzalez, who is in charge of the case, to approve an auction quickly. Chrysler wants a schedule that would require creditor objections to the sale to be submitted by 11 May and an auction held by 22 May. However, the plans are supposed to be confidential till officially announced.

Under bankruptcy law, offers for bankrupt companies or their assets are generally subject to the possibility of higher bids at a court-supervised auction. Greenhill & Co, the financial adviser Chrysler hired in March, said the Fiat deal was fair.

''No potential buyers have expressed an interest in acquiring Chrysler as a going concern as an alternative to the proposed transaction with Fiat,'' Greenhill managing director Bradley Robins said in an affidavit filed with the court supporting the sale. ''Chrysler has insufficient funds to continue operating and no other providers of financing.''

The new entity, yet unnamed, will be the lead bidder in the auction and offer $2 billion for most of Chrysler's assets, while assuming some liabilities, Bloomberg quoted a source as saying. The new company would be owned by an employee association, Fiat, the US treasury and the Canadian government, Chrysler has said.

Fiat's 20 per cent stake could be increased to 35 per cent if the company meets certain milestones, Chrysler said.

The US treasury department is providing a $4.5 billion bankruptcy loan to help Chrysler reorganise, according to court filings. Loan terms require the company to complete an asset sale to Fiat or close another comparable deal in less than 60 days, a timeframe personally set by Obama.

The automaker filed for Chapter 11 bankruptcy 30 April after a group of 20 secured lenders rejected an offer by the US government that would have paid them $2.25 billion for $6.9 billion of debt, or 33 cents on the dollar. Chrysler's 22 US factories with about 26,800 hourly workers have been on idle since 1 May.

Chrysler, in its 30 April filings, listed assets of $39.3 billion and liabilities of $55.2 billion, making it the fifth-largest bankruptcy in US history, according to data compiled by Bloomberg News.

Chrysler operations that aren't sold would receive about $200 million through the bankruptcy loan ''to run a safe, prudent and orderly wind down and sale,'' the company said in court filings. Those assets will include eight manufacturing plants and related machinery with a book value of about $2.3 billion, according to a Chrysler executive's affidavit filed with the bankruptcy court.