WRAPUP 6-GM to file for bankruptcy on Monday

* Chapter 11 filing planned for Monday morning in New York

* GM bondholders approve debt-for-equity exchange

* President Obama addressing auto industry on Monday
(Adds detail on closures, quotes; For Reuters coverage on
autos, click [ID:nCARS1)

By Kevin Krolicki and John Crawley

DETROIT/WASHINGTON, May 31 (Reuters) - General Motors Corp
(GM.N) will file for bankruptcy on Monday, U.S. officials said,
forcing the 100-year-old automaker once seen as a symbol of
American economic might and dynamism into a new and uncertain
era of government ownership.

The planned filing, confirmed by Obama administration
officials, would be the third-largest in U.S. history and the
largest-ever U.S. manufacturing bankruptcy. [ID:nN31435926]

The decision to push GM into a fast-track bankruptcy, and
provide $30 billion of additional taxpayer funds to restructure
the company so it can better compete with lower-cost Asian
automakers, is a huge gamble for the Obama presidency.

But the administration saw few other options at a time when
the jobless rate is soaring, given that GM employs 92,000 in
the United States and is indirectly responsible for 500,000
retirees.

The filing in a federal court in Manhattan is expected
before U.S. markets open and caps a three-decade-long decline
for the Detroit automaker that ended in outright crisis after
the weak global economy, high oil prices and tight credit
slammed sales and left it unable to raise cash.

"Now the hard part begins, which is making GM and Chrysler
competitive. If they don't do that, then we'll be doing this
all over again in a few years," said Christopher Richter, auto
analyst at CLSA Asia-Pacific Markets in Tokyo.

"The immediate implication is that the companies are going
to get smaller and so market share is up for grabs, which means
that rivals like Toyota (7203.T), Honda (7267.T), Nissan
(7201.T) and Hyundai (005380.KS) are going to gain share."

THE LIFELINE

Since the start of the year, GM has been kept alive with
U.S. government funding as a White House-appointed task force
vetted plans for a sweeping reorganization that will be
undertaken with $50 billion in government financing.

By preparing to take a 60 percent stake in a reorganized
GM, the Obama administration is gambling that the automaker can
compete with the likes of Toyota Motor Corp after its debt is
cut by half and its labor costs are slashed under a new
contract with the United Auto Workers (UAW) union.

The governments of Canada and Ontario agreed to provide
another $9.5 billion to GM in a late addition to the plans for
the bankruptcy that have been taking shape for weeks, senior
U.S. officials said. [ID:nN31418487]

The plan as detailed by U.S. officials is for a quick sale
process in bankruptcy court that would allow a much smaller GM
to emerge from court protection in as little as 60 to 90 days.

GM plans to close 11 U.S. facilities and idle another three
plants. It has not provided an update target for job cuts but
had been looking to cut 21,000 factory jobs from the 54,000 UAW
workers it now employs in the United States.

The UAW would have a 17.5 percent stake in the "new GM."
The Canadian government would own 12 percent stake and GM
bondholders would get 10 percent.

RELUCTANT INVESTOR

Officials involved in the planning for GM said the White
House was a "reluctant investor" in GM but had to prevent a
liquidation that analysts say would have cost tens of thousands
of jobs at a time when the economy is mired in recession.

Analysts said while there were high risks to the Obama
administration's approach, it had succeeded in pulling GM back
from the brink of collapse. [ID:nN31400726]

"I think they have a much greater chance of emerging as a
healthy company now than they did just six months ago," said
Aaron Bragman, an analyst at IHS Global Insight. "Nobody gave
them any possibility of emerging as a whole company."

President Barack Obama is due to speak on the auto industry
and the GM situation shortly before noon Eastern time on
Monday. A news conference by GM Chief Executive Fritz Henderson
will follow.

U.S. officials said there was no plan to provide any
further funding for GM and insisted that the U.S. industry
could support all of the Detroit Three.

The administration said the goal of the restructuring was
to help GM be profitable in a year when the industry sells 10
million vehicles, versus the 16 million it sold in 2007.

The task force is led by Wall Street investment banker
Steven Rattner and labor negotiator Ron Bloom, and includes top
White House adviser Lawrence Summers and U.S. Treasury
Secretary Timothy Geithner.

A federal judge could approve the sale of Chrysler's best
assets to a new company led by Fiat SpA as soon Monday. Ford
Motor Co (F.N) has not sought any emergency federal aid.

"We do believe, and completely endemic in the president's
decision, was a belief that this country can support three
domestic successful viable auto companies," a senior Obama
administration official said.

Even if GM and Chrysler emerge swiftly from bankruptcy this
summer, the autos task force will stay in business -- shifting
to an investment manager role.

Senior administration officials said on Sunday there was
plenty to keep the task force staff busy, monitoring the
government's stake of about 60 percent of GM, and less than a
10 percent stake in Chrysler. [ID:nN31418995]

CAREFULLY ORCHESTRATED FAILURE

GM's bankruptcy is the most carefully orchestrated Chapter
11 filing in the history of American business.

The automaker's final descent started with President George
W. Bush administration's emergency aid announcement on Dec. 19
and accelerated in late March when the Obama government gave it
60 days to restructure.

While the "new GM" is expected to emerge quickly from court
protection, the automaker's shuttered plants, stranded
equipment and other spurned assets would be left to liquidation
in bankruptcy.

Al Koch, a managing director at advisory firm AlixPartners
LLP, will be appointed chief restructuring officer in charge of
liquidating those GM assets. [ID:nN31395352]

A veteran restructuring adviser, Koch has had prominent
roles in Kmart Corp's restructuring and other turnarounds.

Over the weekend, GM won support from investors
representing 54 percent of its $27 billion in bondholder debt
offered their support for the U.S. government's plans.
[ID:nN31329833]

Bondholders could take up to 25 percent of GM if it
recovers to be worth what it was in 2004, before it began round
after round of cost-cutting in what proved to be a failed bid
to make up for lost sales.

The bondholders' support does not ensure court approval but
gives the company an important symbolic victory that bankruptcy
experts and analysts say will help GM's case.

Obama said in an interview with NBC aired over the weekend
that the government was forced to take over GM in order to
prevent a collapse that could have brought down other companies
and further batter the recession-hit U.S. economy.

"My preference would have been to stay out of it
completely," Obama said.

In the past week, GM has also concluded an amended
agreement with the United Auto Workers union under which the
UAW will receive a 17.5 percent in a restructured company and
other debt and preferred stock instead of $20 billion in cash.

The UAW also made concessions last week that some say mark
a fresh blow to the once common, well-paid manufacturing jobs
that created America's middle class. [ID:nN31420692]

Founded in 1908, GM rose to dominate the U.S. and global
auto industries under the stewardship of pioneering chief
executive Alfred Sloan, who famously pledged the automaker
would deliver "a car for every purse and purpose."

By the mid-1950s, at the peak of its success, GM had some
514,000 employees. It accounted for about half of U.S. new car
production and its sales were twice as large as the No. 2
corporation, Standard Oil.

GM's stock fell to 75 cents on Friday, a level last seen
during the Great Depression on what was expected to be its last
trading day before bankruptcy.
(Additional reporting by David Bailey, Soyoung Kim, David
Lawder, John Crawley, Walden Siew and Tom Hals; Editing by Ted
Kerr and Patrick Fitzgibbons)