General Motors is seeking court approval to sell its main assets to a government-backed "New GM", saying it's essential for the company's survival.
Chief executive Fritz Henderson told a US bankruptcy court on Tuesday the company will be forced into liquidation if the sale is not approved by 10 July and GM loses access to government funding.
GM filed for bankruptcy protection a month ago.
The hearing before Judge Robert Gerber in Manhattan, is expected to continue for at least two days. Mr Henderson testified on the first day.
If approved, the auto company will be able to sell its best assets, including Chevrolet and Cadillac, to a new company under Section 363 of the bankruptcy code and get a capital injection of $US60 billion from the US government.
No competing bidders have emerged as an alternative to the government's financing - which will give it a stake of 60%.
GM's old assets would remain behind in bankruptcy court to be liquidated.
The bankruptcy court will also hear objections to the move from GM's creditors committee, dissenting bondholders, those with liability and asbestos claims, as well as unions and dealerships.
The US Supreme Court cleared the way on 9 June for the sale of Chrysler LLC to a group led by Fiat SpA of Italy.