SEOUL, Sept 30 (Reuters) - South Korea approved a $12 billion debt rescheduling plan for bankrupt Daewoo Motor Co on Monday, taking the South Korean automaker a step closer to a restructuring that will bring in General Motors Corp .
Inchon District Court said in a statement it approved the plan after Daewoo Motor creditors and other related parties voted for it on Monday afternoon.
"The court approval cleared the way for the launch of the Daewoo-GM joint venture, which is expected around mid-October," said an official at Daewoo Motor.
Daewoo Motor said in mid-September creditors would convert 77 percent of debt worth 14.56 trillion won ($11.95 billion), which Daewoo Motor owed to them, into Daewoo Motor stock.
The rest of the debt, 4.44 trillion won, would be transferred to five spin-off companies that would own Daewoo Motor's assets and repay the money over nine years. The creditors would own the spin-offs, one of which would be a joint venture with GM.
GM, the world's largest automaker, agreed in April to take part ownership of a Daewoo spin-off that would own three of the bust company's plants.
GM's investment offers the U.S. giant a far larger slice of the South Korean car market, Asia's second largest. The company sells only about 400 cars a year there versus Daewoo's 300,000.
State-run banks dominate Daewoo Motor's creditors. They include Korea Development Bank, Korea Asset Management Corp and most of the country's major commercial banks. Listed creditors include Woori Bank , Chohung Bank and Korea Exchange Bank .
The shares of Daewoo marketing affiliate Daewoo Motor Sales Co finished down 8.7 percent at 7,410 won on Monday, underperforming the 2.6 percent decline in the broader market .
Nick Reilly, president and chief executive designate of the new entity, to be called GM-Daewoo Auto & Technology Co Ltd, said in late September the new firm would take over much of Daewoo's car business, minus some overseas assets, such as its U.S. operations.
While there will be no Daewoo brand going forward in the United States, he said it was possible that GM could rebadge some Daewoo products and sell them under its own U.S. brands.
GM-Daewoo Auto & Technology will have the capacity to build 800,000 vehicles worldwide, with four plants in South Korea and one in Vietnam, Reilly said.
($1=1217.9 Won)