* Group of small bondholders object to GM's sale

* Say were excluded from process

* Seek expedited reorganization plan, not fast-track sale

By Emily Chasan

NEW YORK, June 19 (Reuters) - A small group of General
Motors Corp GMGMQ.PK bondholders formally objected on Friday
to the automaker's plans for a speedy sale of its assets in
bankruptcy court, according to court documents.

The group, which calls itself the "Unofficial Committee of
Family & Dissident GM Bondholders," said in court papers that
it wanted the court to reject GM's proposed fast-track sale and
rather pursue an accelerated bankruptcy reorganization plan
that could still allow GM to emerge from bankruptcy within 60
to 90 days.

GM is proposing to do a speedy "363 sale" of its best
assets, named after section 363 of the U.S. bankruptcy code,
rather than come up with a typical Chapter 11 reorganization
plan.

The bondholders fear that under the government-orchestrated
proposed sale of GM's assets, they would not be able to
participate in a speedy reorganization process.

The group said it represents the interests of more than
1,500 mainly family and noninstitutional bondholders holding
more than $400 million in GM bonds, who had been unfairly
excluded from the process.

GM, which filed for bankruptcy protection on June 1, is
seeking court approval for a government-backed restructuring
plan under which the Obama administration would take a 60
percent stake in the newly formed company made up of GM's most
profitable assets.

The UAW would have a 17.5 percent stake in the new company,
and the Canadian government would own about 12 percent while GM
bondholders are expected to get about 10 percent.

"This 'private' deal was struck in a back room, without any
transparency, without any meaningful opportunity for the
bondholders represented by the (unofficial committee) to
participate in the process," the group said in its objection
filed in U.S. bankruptcy court in Manhattan.

The "unofficial committee" said that if the sale was
approved, bondholders and unsecured creditors would face
"disproportionate losses" on $27 billion in claims they have
against the automaker.

The bondholders claimed that GM was pursuing an
impermissible covert reorganization known as a "sub rosa" plan,
in an argument similar to that made by dissident lenders
opposing Chrysler LLC's bankruptcy sale last month.

"New GM could have been created fairly, in accordance with
the law, transparently, and urgently, with a plan of
reorganization," the group wrote. "It can still be done in that
proper manner."

The "unofficial committee" is being by represented by
attorney Michael Richman of the Washington, D.C.-based Patton
Boggs law firm, according to court documents. It will seek to
become an "official" committee at a bankruptcy court hearing
next week.

GM is also facing a handful of challenges to its sale,
including some limited objections from suppliers or other
parties it had business relationships with and one from the
state of Texas which claims GM's plans to reject certain
dealerships or force other dealers to sign on to new agreements
under the threat of rejection violate Texas law.

Some individual bondholders, including a 79-year-old
bondholder from New York, and a Connecticut accounting
professor and his wife who hold GM debt, have also filed papers
opposing the sale with the court. [ID:nN18401257]

A court hearing on GM's sale request is scheduled for June
30.

The case is In re: General Motors Corp, U.S. Bankruptcy
Court, Southern District of New York.
(Reporting by Emily Chasan, editing by Matthew Lewis)