Bondholders of struggling automotive giant General Motors (GM) rejected a debt exchange offer that expired at midnight on Tuesday night, saying that they did not want to give up what they are owed for a comparatively small amount of company shares.

The bondholders are currently owed $27 billion, and were offered a 10% stake in GM if they would waive their claims. Since they refused, the next likely progression is the court system. It remains to be seen whether the case would be tried in or out of bankruptcy court.

Meanwhile, the Obama Administration has constructed a bankruptcy filing on behalf of GM that would give the government a majority stake in the auto maker and would make the GM bailout the largest government rescue since the government began pouring money into corporations last year.

The plan being formed by the Obama Administration would lend GM around $30 billion in addition to the $19.4 billion already loaned. Canada has also expressed interest in a stake in GM, offering $9 billion for a minority share, according to reports.

Together, the US and Canada would own around 72% of GM, and would be able to appoint board seats and control GM’s retiree health-care fund. The union’s retiree health trust would hold a 17.5% to 20% stake, while bondholders could still own around 10% of the company even though the initial offer has been publicly refused.

GM issued a statement on Wednesday stating that the Board of Directors will be meeting to discuss GM's “next steps” in light of the expiration of the exchange offers.