UPDATE 1-Aleris seeks court approval to cancel contracts with GM

* Seeks court approval to cancel contract with General Motors

* Says "very concerned" about payment terms in contracts

By Santosh Nadgir

BANGALORE, March 2 (Reuters) - Aleris International Inc [TXPACA.UL], which filed for bankruptcy last month, has sought approval from a U.S. bankruptcy court to reject four purchase contracts with General Motors GM.N, saying it was "very concerned" about the extended payment terms in the contracts.

In a motion filed late last week, the company said it's subsidiary, Alchem Aluminum Inc, was supposed to start shipping certain aluminum and silicon products to General Motors from March 1, 2009.

"Given GM's public pronouncements about the current state of their finances and the widely known difficulties facing the automobile industry, the debtors (Aleris) are very concerned about the extended terms set forth in the contracts," the filing said.

Aleris added that it was not even sure if GM would be able to pay for the materials on the due date and the cost of preparing the shipment had created an economic risk that was not justified by the benefits of the contract.

The decision to reject the contract is a sound exercise of business judgement, it said. Under U.S. bankruptcy rules, a bankrupt company can reject executory contracts, such as this, subject to court approval.

Aleris, which makes aluminum rolled products and is owned by an affiliate of private equity firm TPG [TPG.UL], filed for Chapter 11 bankruptcy protection in February citing decreased demand for aluminum amid a downturn and a heavy debt load.

The case is In re: Aleris International Inc, No 09-10478, U.S. Bankruptcy Court, District of Delaware. (Editing by Jarshad Kakkrakandy)