Aug. 1 (Bloomberg) -- General Motors Co.’s Opel unit may be forced into bankruptcy should the U.S. automaker and the German government fail to agree on a buyer, according to three people close to the trust that controls the division.

The trust’s five-member board doesn’t back an offer by Magna International Inc., the Canadian partsmaker preferred by Germany, said the people, who asked not to be identified because the talks are private. They said the officials favor a bid from investor RHJ International SA or pushing Opel into insolvency.

“I’m surprised at that,” said David Cole, chairman for the Center for Automotive Research in Ann Arbor, Michigan. “I would think that it’s a whole lot better to deal with somebody in the business already than a pure financial buyer.”

GM is concerned that a Magna deal might imperil control of some patents, one of the people said. Germany, which agreed to back Opel’s sale with 1.5 billion euros ($2.1 billion) in short- term loans, picked Magna as its preferred bidder in May to protect jobs amid the worst recession since World War II.

The Opel trust was set up as an interim owner of the Ruesselsheim, Germany-based unit, and oversees talks with the suitors. It also has to approve any business decisions by Opel, including which bidder will win.

A final decision on the sale will be made by GM, which emerged from bankruptcy July 10 and is controlled by the U.S. Treasury.

‘Soap Opera’

Opel’s fate “has been an interesting soap opera,” said Joseph Phillippi, an analyst at AutoTrends Consulting in Short Hills, New Jersey. “GM might be interested in regaining control of Opel because there’s a tremendous amount of technology at stake.”

Nicole Mommsen, a spokeswoman for the Opel trust, declined to comment and referred to a July 25 statement by the trust that it hasn’t yet made a preliminary decision on the bids.

GM signed a non-exclusive memorandum of understanding with Magna in May. It has continued to hold talks with Brussels-based RHJ, whose automotive assets include some former holdings of Ripplewood Holdings LLC. With the Magna deal at risk, bankruptcy becomes an option while Detroit-based GM still prefers a sale.

“We wouldn’t be doing all these negotiations if we wanted to liquidate Opel,” said Chris Preuss, a GM spokesman. “We simply cannot move forward on the bid presented by Magna, a bid that is substantially out of line with the memorandum of understanding the government endorsed, and we’re working with Magna to get the bid to a level that can be executed.”

Magna, whose offer is backed by financing from Russia’s OAO Sberbank, has made promises to its partner on assets that were never in the original agreement with GM, said one of the people close to the trust.

GM Review

GM’s board will review bids for Opel during a meeting starting Aug. 3, people familiar with the planning have said. The trust will gather to discuss the bids the following week, said two of the people. Approval is also required by the U.S. Treasury, people familiar with the process have said.

The directors of the trust, chaired by Fred Irwin, are Dirk Pfeil, a former state lawmaker who now represents Germany’s four states with Opel plants; Manfred Wennemer, a former Continental AG chief executive officer, who represents the German federal government; Enrico Digirolamo, chief financial officer of GM Europe; and GM’s negotiator, John Smith.

The trust owns 65 percent of Opel, with GM holding the remaining 35 percent.

Meg Reilly, a Treasury spokeswoman in Washington, declined to comment on Opel. Arnaud Denis, a spokesman for RHJ; Daniel Witzani, a spokesman for Aurora, Ontario-based Magna; and Ulrich Wilhelm, a spokesman for the German government, couldn’t be reached for comment yesterday.

A government-sponsored study by Lazard Ltd., the U.S. investment bank advising Germany on the Opel sale, showed that RHJ’s offer is superior, said one of the people. Lazard spokeswoman Judi Mackey declined to comment.

Magna’s bid is preferred by labor unions, German state governments and the Social Democratic rivals of German Chancellor Angela Merkel, who faces Sept. 27 elections. Of GM Europe’s 55,000 jobs, 25,000 are in Germany.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Andreas Cremer in Berlin at acremer@bloomberg.net

Last Updated: July 31, 2009 18:07 EDT