The US Government is set to take a 72.5 per cent stake in General Motors after the carmaker secured a last-minute deal with its biggest creditors on Thursday.

GM is heading for what would be the biggest bankruptcy by an American industrial company after bondholders that own about 20 per cent of its $27.2 billion (£17 billion) unsecured debt agreed to accept a 10 per cent stake in the restructured company and warrants to buy a further 15 per cent in return for forgiving its debt.

Smaller bondholders have until 5pm tomorrow to accept the deal or face having their investments all but wiped out during a more contentious bankruptcy process. If GM wins approval from bondholders, the company will avert the prospect of a bitter courtroom battle over its assets, clearing the way for a speedy restructuring under Chapter 11 bankruptcy protection. A filing could come this weekend. During the bankruptcy process, GM's assets would be sold to a new company funded by the US Government, which would resume GM's business.

The Government has provided $19.4 billion in financing to GM to keep the company going. About $8 billion of that will convert into debt and $2.5 billion into preference shares. The remainder will go towards taxpayers' 72.5 per cent stake in the new GM.

The carmaker revealed yesterday that the Government had agreed to provide more than $50 billion in so-called debtor-in-possession financing to pay for the company's restructuring. The company is unlikely to emerge from bankruptcy as quickly as Chrysler, which went bust at the end of last month. A senior Obama Administration official said that bankruptcy would take at least 60 to 90 days, perhaps longer. “This is a much more complicated company than Chrysler — it's a global company,” he said.

It could be as long as 18 months before GM became a publicly traded company once more. In a regulatory filing, GM released details of how ownership of the new company would be split: bondholders would be permitted to buy up to 7.5 per cent of the new company once its value hit $15 billion. They would be allowed a further 7.5 per cent if the value of the new GM rose to $30 billion. The United Auto Workers (UAW) union would hold 17.5 per cent of the new company as well as $6.5 billion of preference shares and $2.5 billion of debt. The UAW would also have warrants to buy 2.5 per cent of the new company if its value hit $75 billion. The deal is in return for the UAW forgoing about half of the $20 billion that GM owes to a retirement healthcare fund.

The pressure on the car industry was illustrated yesterday when Visteon, America's second-biggest parts maker and a former unit of Ford, and Metaldyne Corp, a unit of Asahi Tec, of Japan, went bust.

The battle to save GM's European division continued yesterday. Lord Mandelson, the Business Secretary, had an hour-long telephone conversation with Karl-Theodor zu Guttenberg, the German Economy Minister, to discuss in detail emergency bridge-loan funding plans for Opel and the merits of the respective bids for GM Europe, which includes Vauxhall, the UK division. The bids from Fiat, the Italian carmaker, and Magna, the Canadian car parts specialist, are believed to be the front-runners.

Frank-Walter Steinmeier, the German Finance Minister, said that he was “very confident” of clinching an agreement today. Last night he spoke to Hillary Clinton, the US Secretary of State, to reopen negotiations that broke down amid acrimony early yesterday. A spokesman said that Mrs Clinton had pledged “the greatest possible American support” from Timothy Geithner, the Treasury Secretary.

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