The governor of the German state of Hesse, Roland Koch, said Monday that an insolvency of General Motors Corp.'s (GM) local unit Adam Opel GmbH can't be ruled out, but said that this would be the worst option.

"No bidder must believe that he can dictate conditions. The government wants to see a good offer at the end of the day," Koch told reporters in Berlin.

Koch said an insolvency would be "the worst of any possible options, in particular because it would affect suppliers and the pension payments for employees...It would be bad if they got lost." He said that it is "important that investors also take over risks".

Austria-Canadian auto supplier Magna International Inc. (MGA) appears to be frontrunner for Opel. Italian automaker Fiat SpA (F.MI) has launched a rival bid for Opel, as well as RHJ International (RHJI.BT), a European buyout firm of investor U.S. Ripplewood with holdings in the auto-parts industry.

Company Web site: www.opel.com

-By Andrea Thomas and Christoph Rauwald, Dow Jones Newswires; +49 30 2888 4126; andrea.thomas@dowjones.com