If General Motors Corp files for bankruptcy, as widely expected,
plans include a quick sale of the automaker's healthy assets to a new
company owned by the U.S. government, a source familiar with the
situation said on Tuesday.

The source, who was not cleared to speak with the media and would
not be identified, said the plan also called for the government to
forgive the bulk of $15.4 billion emergency loans that the U.S. has
already provided to GM.

The source did not specify a purchase price and added that the new
company is expected to honor the claims of secured lenders, possibly in

The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

GM has about $6 billion of secured debt, including a secured revolving credit and bank debt.

The government's plans include giving stakes in the new company to
GM's union and bondholders, although the ownership structure of the
company is still being negotiated, said the source who is familiar with
the company's plans.

In addition, the government would extend a credit line to the new company, the source said.

The government has given GM until June 1 to restructure its operations to lower its debt burden and employee costs.

If those talks failed, the company has said it would follow rival Chrysler LLC into bankruptcy.

Setting up a new company to buy the healthy assets is aimed at
reassuring consumers who might not be willing to make a major purchase
from a bankrupt company, fearing it would not honor warranties or
provide service.

The board of the new company would be established with the tacit
approval of the government. Fritz Henderson, who took the helm of GM
earlier this year after the government pushed out Rick Wagoner, would
likely head the new company, the source said.

GM could not be immediately reached for comment.

GM shares were up about 9 percent at $1.29.