The US Government was forced to take a large stake in General Motors (GM) to stop the company being broken up, President Obama said, as the carmaker prepared to make the world's largest industrial bankruptcy filing today.

Almost 55 per cent of GM's unsecured creditors agreed over the weekend to accept a stake of up to 25 per cent in a restructured company in return for giving up $27.2 billion (£16.8 billion) of debt.

It is believed that GM's UK operations will be placed in a “pre-packaged” administration procedure under which they will fall into insolvency and immediately be sold on to Magna International, the Canadian car-parts maker and the bidder approved by Lord Mandelson, the Business Secretary.

The American agreement allows GM to seek a fast-track bankruptcy. The 100-year-old company is expected to file an application for Chapter 11 bankruptcy protection in a New York court today.

Fritz Henderson, the chief executive of GM, is scheduled to address the issue at noon today in New York.

The US Government has been promised up to 72.5 per cent of GM, $8 billion of debt and $2.5 billion of preference shares in return for the $19.4 billion bailouts it has already provided and a further $30 billion in funding needed to put GM through the bankruptcy process.

President Obama is expected to make a speech today in which he is likely to emphasise his commitment to making over the ailing American motor manufacturing sector.

In an interview screened by NBC News on Saturday, the President said that he would have preferred to avoid taking a large government stake in GM. “But the alternative was to see a liquidation, bankruptcy in which an enormous institution with huge importance to our economy simply gets broken up into pieces,” he said.

President Obama said that he expected the Government to end up owning less than 72 per cent of the company.

The bondholders will be given an initial 10 per cent of the new company, plus warrants to buy a further 15 per cent if GM's value rises to hit certain targets.

Elliot Sloane, a spokesman for GM's biggest bondholders, holding 19 per cent of the $27.2 billion debt, said yesterday that an additional 975 institutions had agreed to support the vital debt-for-equity swap.

The United Auto Workers union will hold the remaining 17.5 per cent stake in the restructured company in return for forgiving half of GM's $20 billion debt to a retirees' healthcare fund.

Existing shareholders will be wiped out.

GM's bankruptcy filing will be the third-largest in American history, based on the $91 billion of assets held by the company at the end of 2008.

The collapse of Lehman Brothers, the Wall Street bank, last September was the largest, at $639 billion, with the collapse of WorldCom, the telecoms company, in July 2002 being the second-largest, at $104 billion.

Chrysler, GM's smaller rival, filed for Chapter 11 on April 30 and is expected out of bankruptcy by mid-June.

GM's filing comes after it failed to meet a government deadline to cut its debt and costs by today, striking a blow to America's reputation as an industrial power.

The agreement with bondholders and the union over ownership of the company's assets has raised hopes that GM will make a fast exit from bankruptcy protection.

However, GM's restructuring is unlikely to be as simple as Chrysler's, with some experts putting the time for the company's emergence from bankruptcy at closer to six months.

Nor does the filing solve the problem of general decline in the motor industry. GM's sales in the US were down by 45 per cent in the year to the end of April as cash-strapped Americans avoided buying new cars.

This, however, is not a new phenomenon. GM has lost almost $88 million since the end of 2004 as it has struggled to compete with cheaper and more efficient models from overseas.

Even a trimmed-down GM would need Americans to buy ten million new cars each year to break even.

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