A Tokyo court rejected an appeal from prosecutors who had sought to extend Carlos Ghosn’s jail detention, bolstering the chances for the former Nissan Motor Co. chairman to receive bail and to fight allegations of under-reporting of his income.

The court earlier ruled to dismiss keeping Ghosn in custody for a further 10 days as requested by the prosecution, who may now take their case to the Supreme Court. Ghosn’s lawyers, speaking before the court ruling on the appeal, said they plan to apply for bail, and that the car titan could be out as soon as Friday if the request is approved.

The arrest last month of the high-flying executive has rocked the world’s biggest auto alliance, raising questions over whether the partnership between Nissan and Renault SA will survive Ghosn’s downfall. He was indicted on December 10 for under-reporting his income from Nissan in securities reports, a charge Ghosn has denied. The court kept extending his detention and his current tenure was due to end this week. They also rejected on Thursday an appeal to extend the detention for Ghosn aide Greg Kelly, who was arrested along with him.

Kelly’s lawyers plan to file for bail Thursday or Friday, Kyodo reported. The court decision could impact the investigation, said Shin Kukimoto, deputy chief prosecutor at the Tokyo District Public Prosecutors Office, declining to comment on whether his office would appeal to a higher court to annul the district court’s order. Nissan, which dismissed Ghosn as chairman after accusing him of understating income and using company money for personal use, declined to comment.

Ghosn is free to talk to the media when released, Kukimoto said.

“The chances of bail are very high,” said Nobuo Gohara, a lawyer and former prosecutor. “To begin with, this isn’t a case that should need such a lengthy detention.”

Powering controversy

Ghosn, 64, has been widely credited with saving Nissan from failure and bringing it together with Renault. He stands accused of under-reporting his income by tens of millions of dollars after a months-long investigation by Nissan into his conduct and compensation that as largely kept from its French partner. The lack of transparency and concern Nissan will use Ghosn’s absence to push for more power in the alliance has heightened tensions between the two automakers.

If Ghosn gets bail, his movements are likely to be restricted to his home or a hotel, and he’ll need the permission of the court if he wishes to leave the country, legal experts have said. Japan’s prosecutors have faced criticism for a lack of transparency in how they have handled the case.

Other lawyers such as Tsutomu Nakamura, a former public prosecutor who is the founder of Nakamura International Criminal Defense in Tokyo, suggested that the court decision doesn’t necessarily mean Ghosn may walk out of jail immediately.

“The prosecutors will file the complaint against this judge’s decision immediately,” he said. “I think that the prosecutors failed to prove the seriousness of the case.”

If proven, Ghosn’s alleged offence may carry a sentence of as much as 10 years. The former Nissan chairman, who remains at the helm of Renault, has also been accused by Nissan of misusing company funds, including to buy homes from Brazil to Lebanon.

Nissan and former representative director Kelly were indicted along with Ghosn on the allegations around under-reporting his income. Under the Japanese system, indictment allows prosecutors to lay formal charges.

Ghosn’s lawyers have said the charge that he helped himself by converting compensation to deferred pay is flawed because the compensation agreement wasn’t properly ratified, according to a statement by the office of Motonari Otsuru, Ghosn’s lawyer. Otsuru is a former head of a special investigation task force of the Tokyo public prosecutor’s office.

Nissan’s board on November 22 removed Ghosn from the post of chairman and American citizen Kelly from his position. Nissan’s partner Renault has so far not removed Ghosn from the post of chief executive officer, but instead appointed an interim person to the role.

Disagreements within the world’s biggest automotive alliance that was spearheaded by Ghosn have all but exploded since his arrest. Renault’s most powerful shareholder, the French state, has stressed Ghosn should be considered innocent until proven guilty and demanded that Nissan share all evidence it has gathered.

Nissan CEO Hiroto Saikawa travelled to Amsterdam for a December 18 meeting of the alliance between Nissan, Renault and the third partner, Mitsubishi Motors Corp. While there, he had a one-on-one meeting with Renault interim chief Thierry Bollore that Saikawa described as “positive” and “productive,” according to Nissan.

Saikawa has emerged as a driving force in the investigation about the alleged wrongdoing by Ghosn and Kelly. Renault, Nissan’s largest shareholder and the company that bailed out the Japanese automaker two decades back, has been pressing for specifics, as has the French government.

The arrests were the result of a coup by executives including Saikawa, Kelly’s wife, Dee Kelly, said in a video released on Wednesday. Saikawa was asked on the day Ghosn and Kelly were arrested whether a coup was underway at Nissan. He replied: “That is not my understanding. I didn’t make such an explanation and think you should not think of it that way.”