General Motors bondholders, pushing for a better deal under the carmaker’s restructuring, will be watching a New York court on Tuesday as a group of Chrysler creditors tries to block the imminent emergence of GM’s smaller rival from bankruptcy protection.

GM’s offer to the bondholders of a 10 per cent equity stake in the restructured company expires at midnight. The bondholders, with $27bn in unsecured claims, are widely expected to reject the proposal, setting the stage for GM to file for bankruptcy protection by June 1.