General Motors Corp moved closer to filing the largest U.S. industrial bankruptcy after a crucial bond exchange proposal failed and as officials in Germany neared a decision on which company would take over GM's European brand, Opel.

At the same time, already-insolvent U.S. automaker Chrysler appeared to be wrapping up its bankruptcy proceedings far ahead of schedule.

With the Chrysler case nearing conclusion, attention will move to the timing of GM's filing -- expected within the next few days -- and the sale of Opel.

Chrysler will likely clear its last major bankruptcy hurdle when a judge is expected to overrule several hundred objections and approve its sale to a group including Italian automaker Fiat.

Less than 30 days after it filed Chapter 11, the automaker seeks approval to sell its stronger operations to a New Chrysler owned by Fiat, labor unions and the U.S. and Canadian governments, in exchange for $2 billion paid to lenders.

The sale will complete the White House's goal of reorganizing the automaker in its 30-to-60-day time frame, a goal once thought impossible for a company as complicated as Chrysler.

As U.S. automakers, unions, dealers and suppliers focus on the future of GM and Chrysler, European eyes are on Opel.

German Chancellor Angela Merkel's government and GM are considering offers for Opel from Fiat, Canadian auto parts company Magna, Belgium-listed holding RHJ and China's Beijing Automotive Industry Corp (BAIC).

Germany aims to close in on a deal to provide Opel with temporary financing should its U.S. parent file for bankruptcy.

While a final winner is not expected to be selected on Wednesday, the German government is expected to narrow the field down.

BOND DEAL FLOPS

Selling off its Opel business was identified as a major priority by GM as it neared the end of this month. The bond exchange was another.

GM said in a statement that an offer to exchange $27 billion in bond debt for a 10 percent stake in a reorganized company by a midnight deadline had fallen far short of the target set in consultation with the Obama administration.

GM said in a release that substantially less than the 90 percent threshold had been tendered and none of the exchange offers would be accepted.

The exchange had been seen as GM's last hope to cut debt outside the kind of bankruptcy that has been under way for Chrysler since the end of April.

Even with a ... favorable reaction from the bondholders, they were going to end up in bankruptcy, said George Magliano, forecasting director at auto industry tracking firm IHS Global Insight.

The fact that the bondholders did not take the deal makes the bankruptcy that much more difficult. That leaves one more big piece that the bankruptcy judge has to decide, Magliano said.

GM's board could meet as soon as Wednesday to review options for the carmaker, which has been kept in operation since the start of the year with $19.4 billion in emergency federal loans.

GM shares, which could be worthless if the automaker files for bankruptcy, were down 21 cents or 14.6 percent at $1.23 on the New York Stock Exchange on Wednesday morning. The shares have traded in a 52-week range of $18.18 to $1.00.

(Reporting by Madeline Chambers and Kevin Krolicki; Additional reporting by Jui Chakravorty, Tom Hals, Christiaan Hetzner, John Crawley, Walden Siew, David Lawder, Emily Chasan and Nick Carey; Editing by Patrick Fitzgibbons, Brian Moss and Matthew Lewis)

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