(Reuters) - A U.S. bankruptcy judge could soon rule on whether the 2009 government-led restructuring of General Motors Co improperly favored hedge funds, and an adverse ruling could cost the automaker nearly $1 billion.

Judge Robert Gerber must decide whether a "lock-up agreement" in the restructuring sent $367 million to a group of hedge fund noteholders at the expense of other creditors.

A trust representing unsecured creditors has sued to undo the lock-up agreement, arguing that it was a last-minute deal secretly folded into GM's bankruptcy to ensure the hedge funds' support.

After the automaker, or "Old GM," filed for bankruptcy in 2009, its best assets were sold to the new General Motors Co . The remainder of the company was liquidated for the benefit of creditors.

While the hedge funds, which hold notes with about $1 billion in face value, received the $367 million under the lock-up agreement, unsecured creditors received just pennies on the dollar. The hedge funds and other investors in the notes also received a claim against "Old GM" for $2.67 billion.

In its lawsuit, which was filed in U.S. Bankruptcy Court in Manhattan, the creditors' trust alleged that the lock-up agreement was unfair to "Old GM" creditors. The trust said the deal took place after the bankruptcy filing and therefore required Gerber's approval, and it called on Gerber to unwind the deal.

GM and the hedge funds have argued the lock-up agreement was sealed before the bankruptcy and was not subject to Gerber's approval. They have also argued the agreement was not secret because it was disclosed in securities filings.

They also argued that the lock-up agreement cannot be unwound without undoing the entire restructuring.

At a court hearing in July, Gerber said he was "shocked" to learn about the hedge fund deal. "The bottom line is, is that this matter is huge," Gerber said. "There was a lack of disclosure to the court on the matter with the potential to injure 'Old GM' creditors to the extent of hundreds of millions, if not billions of dollars."

Gerber held several days of trial between August and October. The hedge funds and GM have asked Gerber to extend the trial for one more day to call a rebuttal witness, a request to which the judge has not responded publicly.

Although the judge has not said when he will rule on the lock-up agreement, experts say a ruling could come as early as this month.

A GM spokesman and Bruce Zirinsky, a Greenberg Traurig lawyer who represents the main hedge fund defendants, both said they expect to prevail but declined to comment further. A lawyer for the creditor trust, Eric Fisher of Dickstein Shapiro, did not respond to requests for comment.

The defendants are the hedge funds that signed the lock-up agreement, as well as others that invested in the notes along with the hedge funds. While GM is not a defendant, the automaker said in an earnings statement in August that the lawsuit could lead to a possible loss of as much as $918 million.

This is because GM could find itself on the hook for a loan of around $1 billion that was owed by GM Canada to a financing unit based in Nova Scotia that had issued notes to the hedge funds.

According to court papers, the lock-up agreement was negotiated with the involvement of Canada and the United States, which were funding the bankruptcy.

The two governments wanted to keep GM Canada out of that country's potentially complicated insolvency proceedings and agreed to pay the $367 million to the hedge funds to resolve GM Canada's debt to the Nova Scotia entity.

In addition to the payment, "Old GM" agreed not to contest claims against it by the noteholders with a face value of $2.67 billion.

Regardless of the outcome, Gerber said in July he expected his ruling to be appealed.

The case is Motors Liquidation Company GUC Trust v The Liverpool Limited Partnership et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-09802.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Eddie Evans and Dan Grebler)

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