The bankruptcy court has approved $4.6 billion (£3 billion) of financing for Chrysler to make payments to dealers and suppliers while it completes an alliance with Fiat.
Bankruptcy Judge Arthur Gonzalez approved the financing package despite vigorous objections from a group of dissident bondholders.
The bondholders, who hold about $3 billion (£2 billion) of Chrysler's $6.9 billion (£4.5 billion) in secured loans, argued that if a Fiat deal falls apart, the value of Chrysler assets backing those loans would be severely depleted.
The US Treasury will supply $4.1 billion (£2.7 billion) of the bankruptcy operating funds. New York banks holding about $4 billion (£2.6 billion) in Chrysler secured loans will supply another $400 million (£265 million). The rest will come from the sale of parts in inventory at Chrysler's replacement components business, Mopar.
It has also been announced that Chrysler's 11,000 salaried US employees will take two weeks of unpaid leave during the bankruptcy, saving it about $21 million (£14 million).