Bondholders have been reluctant to back the sale of assets, but now GM says they have no choice or the once proud auto giant may be forced into liquidation.
It appears one group of bondholders is stalling the process
, calling the deal "Chapter 11 Nationalization" at a hearing in bankruptcy court in Manhattan Thursday.
Attorneys for GM said, however, that this holdout could prove "catastrophic."
Under the plan proposed, GM would be rebuilt as a more leaner, flexible company backed by almost $60 billion in government financing.
General Motors has already received over $16 billion in government aid, which was forgiven as part of the bankruptcy plan.
Michael Richman represents the bondholders who are resisting the bankruptcy deal. Richman says the government needs reconsider offers to what he calls "favored parties," referencing the United Autoworkers Union.
The UAW would receive a 17 percent stake in GM as part of the bankruptcy package.