The GM sale hearing, before Judge Robert Gerber, is expected to continue for at least two days, as the company faces objections and questions from its creditors committee, a group of dissenting bondholders, those with liability and asbestos claims against the company, as well as unions and dealerships.

If the deal is approved, GM will be able to sell its best assets, including Chevrolet and Cadillac, under Section 363 of the bankruptcy code to a "New GM" while the US Treasury would provide billions of dollars in financing.

Evercore managing director J. Stephen Worth said during testimony that his firm valued "New GM" at $38 billion to $48 billion in an analysis the financial firm prepared for the GM board of directors. That is substantially larger than the market capitalization of Ford which is near $18.3 billion. Ford is the only US automaker to have avoided bankruptcy,

GM's old assets would remain behind in bankruptcy court to be liquidated. Testimony also addressed whether "Old GM" will have enough cash to cover the liabilities it will retain, such as the $530 million in environmental claims.

During the hearing, Albert Koch, an AlixPartners executive who will be CEO of "Old GM", said he estimates the company needs $1.25 billion to wind down. He does not expect to present a liquidation plan until early 2010.