DETROIT (AP) — A General Motors Corp. bankruptcy filing seemed inevitable after a rebellion by its bondholders forced it to withdraw a plan to swap bond debt for company stock yesterday.

GM has until Monday to complete a government-ordered restructuring that includes debt reduction, labour cost cuts and plant closures. But a Chapter 11 reorganisation is likely after the company said its offer to exchange $27 billion in unsecured debt for 10 percent of the company's stock had failed. GM has received $19.4 billion in federal loans.

The move came as crosstown rival Chrysler LLC headed to court yesterday to ask bankruptcy judge for permission to sell the bulk of its assets to a group headed by Italy's Fiat Group SpA in hopes of saving itself from liquidation. Attorneys for Chrysler maintain that the Fiat deal is the company's only hope to avoid being sold piece by piece, but car dealers, debtholders, former employees and others are protesting.

Chrysler filed for bankruptcy protection April 30, after the government ended talks with a group of holdout debtholders. Both automakers were pulled down by overwhelming debt, high pension, health care and other labour costs relative to competitors, a global auto sales slump and a dismal US housing market that pulled down demand for pick-up trucks, their top-selling vehicles.

John Pottow, a professor at the University of Michigan who specialises in bankruptcy, said GM evading Chapter 11 now is almost impossible.

"They said no. That's it. They tried. That's why they're going to have to file for bankruptcy," Pottow said.

GM spokesman Tom Wilkinson said the board will meet later this week to decide its next move, but he would not say exactly when. He also would not say if the company would soon file for Chapter 11, nor would he reveal what percentage of bondholders took the offer.

"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the US Department of the Treasury," GM said in a statement issued yesterday.

The Obama administration has said it would only provide more funds if 90 percent of the bondholders, as well as unionised workers, agreed to concessions that substantially reduced GM's costs.

GM also said it cancelled meetings set for yesterday with holders of notes that were not sold in US dollars. The statement said the meetings were to discuss amendments to the debt-for-equity offers, but it did not specify what the amendments were.

There was a small hope on Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM — down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

Wilkinson would not say why GM didn't make the offer to bondholders more attractive.

Because the bondholder deal did not go through, the equity freed by the UAW deal now apparently will go to the US government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50 percent, according to GM's regulatory filings. But it now could be as high as 69 percent. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

Such an arrangement would leave bondholders back where they started — and a Chapter 11 filing all but certain. The deadline for GM's bondholders to tender their debt was midnight Tuesday.

Automakers worldwide are struggling as the global recession has reduced demand for new vehicles. But GM and Chrysler have been particularly hobbled by promises to cover the health and pension costs of tens of thousands of unionised retirees — along with recent record-high gasoline prices that reduced demand for their low-mileage trucks and SUVs.