TORONTO - Victor Li's $650-million bid for an equity stake in Air Canada won court approval Monday in a major step forward in the airline's plans to emerge from bankruptcy restructuring However, Judge James Farley also left some room for the possibility of a rival bid from Cerberus Capital Management, a New York investment company. Li's bid beat out a rival offer last month from Cerberus in a court-sanctioned process, but Cerberus came back with another offer that some creditors said is superior to Li's bid. Lawyers for Cerberus told the court Monday that the New York company will present its latest bid by the end of Tuesday at the latest. Air Canada's board of directors has already approved the deal with Li and his company, Trinity Time Investments Ltd. The deal would see Trinity obtain a 31 per cent stake in a revamped Air Canada. Several major creditors of the airline, including General Electric, Cara Operations, IBM and CIBC, are backing the Li bid. Ernst & Young, the court- appointed monitor handling the Air Canada case, also sided with Li. The board of directors of Air Canada can still look over an offer from Cerberus. If the airline decides to take Cerberus's offer, the company will have to go back to court for permission to proceed. The airline would also have to pay Li a $19.5-million break fee for not siding with him. "What the court decided to do today was ensure that at least one of the bids has a chance of moving forward," Queen's University business professor Douglas Reid told CBC Newsworld. By giving Victor Li's bid the green light without locking Air Canada into the offer, "it at least means that he has received the sanction of the court?" Reid said.