DETROIT (Reuters) –
The United Auto Workers union has overwhelmingly ratified a new cost-cutting labor agreement with General Motors Corp (GM.N), clearing a major hurdle in the automaker's restructuring efforts.

UAW President Ron Gettelfinger said at a news conference on Friday that 74 percent of the UAW-represented workers have ratified the agreement, under which the union would receive a 17.5 percent stake in a restructured company in return for retiree healthcare concessions.

The amended agreement covers about 54,000 U.S. hourly workers in 46 plants and warehouses.

The ratification comes as GM races to slash debt and labor costs ahead of a government-imposed deadline of June 1. The No. 1 U.S. automaker is widely expected to follow smaller rival Chrysler LLC into bankruptcy protection with the financial backing of the U.S. Treasury.

"GM is going to have a clean balance sheet when this is over," Gettelfinger said at the conference. He added the new contract represents "a dramatic reduction in benefits and a lot of risk for the future" for retirees.

Under the agreement, GM would pay half of its $20 billion debt owed to a union-aligned healthcare trust in stock, instead of cash.

The deal would give the healthcare trust, or Voluntary Employees Beneficiary Association, a 17.5 percent stake in a restructured company and warrants for an additional 2.5 percent stake.

The U.S. government would get a 72.5 percent stake under the restructuring, while GM's bondholders would receive 10 percent and warrants for an additional 15 percent stake.

(Reporting by David Bailey and Nick Carey, Writing by Soyoung Kim, editing by Gerald E. McCormick)

ANN ARBOR, Mich. – Saying his client is not a "crook," the lawyer for the former head of Kmart Corp. is asking jurors to clear him of civil fraud charges in a case filed by the federal government.

Scott Lassar says Charles Conaway hid nothing from investors in fall 2001 because there was nothing to conceal. He says the retailer had poor sales, and Wall Street punished Kmart stock as a result.

But the Securities and Exchange Commission claims Conaway withheld information from stock analysts and regulators about how Kmart was dealing with a cash crunch in the months preceding bankruptcy in 2002.

Lassar says the charges are "absurd." Jurors heard closing arguments Friday after 10 days of testimony in federal court in Ann Arbor. They need instructions from a judge before starting deliberations.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

ANN ARBOR, Mich. (AP) — The former head of Kmart Corp. used "lies, deceptions and half-truths" to keep investors in the dark about a cash crisis in the months leading to a 2002 bankruptcy, a government lawyer told jurors Friday at the end of a civil fraud trial.

The Securities and Exchange Commission is not accusing Charles Conaway of cooking Kmart's books or fleecing the company for personal gain. The allegations center on a phone call with stock analysts and a quarterly report to the SEC, both in November 2001.

The government says Conaway is liable for Kmart failing to specifically disclose that it had been delaying payments to vendors and prioritizing bills as a way to save cash. The company also was dealing with an ill-timed purchase of $800 million in merchandise.

"This case at its core is about credibility. ... It's about the senior-most executives at Kmart covering up with lies, deceptions and half-truths a liquidity crisis," SEC lawyer Alan Lieberman said in his closing argument.

"It's not about whether Kmart was a broken company when he took over," Lieberman said.

Conaway, 48, was considered a turnaround specialist when he was hired as Kmart's chairman and chief executive in 2000, a time when the venerable retailer was getting crushed by Wal-Mart Stores Inc. and Target Corp.

Conaway testified that he didn't write or even read the management-analysis portion of the quarterly report to the SEC. He said the company was catching up with vendor payments and had $1 billion in cash and credit when the report was filed.

He said he was candid with Wall Street about poor sales — and the stock price subsequently took a 15 percent dive.

Lieberman told jurors that Kmart had a legal obligation to explain in its SEC report that liquidity had improved because there was a "mountain of unpaid, past-due bills."

"It's a matter of common sense," he said. "What would the reasonable investor want to know?"

A closing argument from Conaway's lawyer, Scott Lassar, was set for the afternoon.

Earlier Friday, on the 10th day of trial, jurors saw a videotaped deposition of Jeff Boyer, who was fired as chief financial officer just a few weeks before Conaway's conference call with analysts.

Boyer said it was not "illegal" or "unethical" to delay payments to suppliers. But he didn't believe Kmart's board "had a sense" of what the company was doing to conserve cash.

If the SEC wins the case, it's possible Conaway could be barred from serving in management at a public company.

Kmart emerged from bankruptcy as a smaller retailer and now is part of Sears Holdings Corp., based in Hoffman Estates, Ill.

NEW YORK (Reuters) –
U.S. automaker Chrysler LLC neared approval for its sale to a group led by Italy's Fiat SpA after three days of testimony ended and parties shifted their attention to 350 objections -- although opponents are likely to file immediate appeals.

Chrysler wants to sell most of its assets to a "New Chrysler" owned by Fiat (FIA.MI), labor unions and the U.S. and Canadian governments, in exchange for $2 billion paid to its lenders.

Unwanted plants and businesses would remain in bankruptcy court to settle outstanding claims and liabilities.

Approval would be a victory for the White House, which had been criticized by many bankruptcy specialists for setting a seemingly unrealistic goal of bringing the automaker's operations through Chapter 11 in less than 60 days.

Opponents to the sale who have filed the objections -- which include debtholders, suppliers and dealers that will be closed -- have been using testimony from executives of Chrysler to show that they could have avoided bankruptcy or offered more to creditors.

Ronald Kolka, Chrysler's chief financial officer, told the court that Chrysler's plan for a restructuring of the company, which it finalized two weeks before its bankruptcy filing, would have provided more for creditors. The plan showed Chrysler estimated a restructured company would have been more profitable in 2009 and 2010 than if it had sealed an alliance with Fiat.

The government, which was keeping Chrysler afloat with emergency funds, rejected that restructured plan in favor of bankruptcy, Kolka said. He said banks also rejected the plan for a restructured Chrysler and said they would only negotiate with the government.

Opponents to the sale also called three dealers to the stand to attack Chrysler's business judgment for closing their stores.

"I've been devastated and left for dead and there's no one out there to help us," said Colleen McDonald. Chrysler plans to shut both of her suburban Detroit dealerships, which are located within several miles of other locations selling Chrysler products.

She described how Chrysler had recognized her dealerships for being among the top 100 of company's more than 3,000 franchises.

McDonald and the other dealers also told of Chrysler "begging them" in the first months of 2009 to buy more cars to help the company.

A Houston-based dealer, Robert Archer, said Chrysler Co-Chairman Jim Press had threatened dealers who were reluctant to place orders, telling them early this year that the company had "a very long memory."

Archer said his three dealerships ordered 200 unneeded Dodge trucks and cars. "The only thing worse than having too much inventory is having the company that gives us franchises go out of business," he said.

Archer and McDonald said losing the franchises will leave them without a license to sell new cars after June 9. Chrysler said it is helping them find dealers willing to take the cars.

Chrysler announced about two weeks after it filed for bankruptcy that it was closing 25 percent of its dealerships. The company's chief executive, Robert Nardelli, told the court on Thursday that bankruptcy had given Chrysler a chance to bring forward a long-term plan to trim the number of dealerships.

Participants in the hearings said the length of the testimony and nature of the questioning suggested sale opponents were building a record for use in appeals likely to be filed soon.

Despite the length of the sale hearings, the case has sailed through court, largely thanks to government financing of the bankruptcy and a willing buyer in Fiat.

To preserve cash, Chrysler shut its operations when it filed for bankruptcy, which added to the urgency of the case.

Nardelli and other witnesses argued that the quick sale was critical to preserve the value of its operations, save more than 100,000 auto-related jobs and prevent further shock waves.

The sale would free the automaker of $6.9 billion of loans and cumbersome retiree benefits that it blamed for its struggles against more nimble competitors.

By teaming up with Fiat, Chrysler could expand beyond the U.S. market and gain technology needed to diversify a product line now heavily weighted toward gasoline-thirsty trucks and SUVs.

The case is In re Chrysler LLC, US Bankruptcy Court, Southern District of New York, No. 09-50002.

(Additional reporting by Chelsea Emery, Emily Chasan and Ajay Kamalakaran; Editing by Steve Orlofsky and Gerald E. McCormick)