DETROIT: General Motors is expected to file for bankruptcy after its latest effort to hone debt failed. GM is now working out a deal to give bondholders a bigger piece of the restructured company, but the strategy is now seen as a step toward bankruptcy rather than averting it. GM last week made a $27.2 billion exchange offer for a 10 percent stake in the company, but only 15 percent of bondholders responded, according to Reuters. GM added an option to buy warrants for another 15 percent, attracting more bondholders, who have until Saturday to participate.

Currently, the federal government owns 72.5 percent of the equity in a new GM; 17.5 percent went into a health care trust for retirees of the company, and 10 percent is on deck for the old GM to pay to creditors. The fed has poured more than $19 billion in bail-out money to GM, $8 billion of which the company is expected to pay back.

GM has a June 1 deadline to make a $1 billion payment to bondholders, the same day of its government deadline to meet restructuring requirements or file for deadline. Should the company file for Chapter 11 as expected, it would represent the country’s third largest bankruptcy in history, behind Lehman Bros. and WorldCom, Reuters said.