GM tells judge that asset sale is its "only option"

By Emily Chasan and Phil Wahba

NEW YORK (Reuters) - General Motors Corp has no choice but to sell its assets to a group led by the U.S. government if it is to survive, a lawyer for the bankrupt carmaker argued in bankruptcy court in Manhattan on Wednesday

"There is no alternative; it is liquidation or this sale. And liquidation is Draconian," GM's lawyer Harvey Miller told U.S. Bankruptcy Judge Robert Gerber.

Saying that no one else had come forward with another offer to compete with the U.S. Treasury's and that no other entity could provide GM with as much bankruptcy financing, Miller urged Gerber to approve the sale.

"The current transaction is the only option on the table," argued Miller, of the law firm Weil Gotshal & Manges.

Harry Wilson, a U.S. Treasury official working on GM's restructuring, seconded Miller's claim that the sale was GM's only option.

Wilson said the government would withdraw its portion of the $33 billion "debtor-in-possession" financing for GM if the sale does not close by July 10.

"We cannot make an open-ended commitment," Wilson testified. "At one point, it's better to cut one's losses."

He testified that last December the federal government was "effectively the lender of last resort" for GM, and estimated the automaker has received $10 billion in funding since its bankruptcy filing -- the bulk of it from the U.S. government.