Good comments here. Many of these posts are assuming that GM would have been shut down completely and liquidated. GM's assets would have been sold and the bondholders would have received something like 50 cents on the dollar. I am sure that there would have not been enough to pay the stockholders anything under the liquidation scenario. Unfortunate but this is how corporate bankruptcy laws are supposed to work. In reality, a full chapter 7 liquidiation was not likely to occur. What would (should) have happened was a chapter 11 reorganization. This is the bankruptcy process that allows the debtor (GM) to reject all of their contracts and start over. So the union contracts would have been out the window and likely the pensions too. The debtor can attract DIP (debtor in possession ) financing that would be senior debt to everything, to give them enough cash to re-start. All of this would have been a new "plan of reorganization". If the company could have convinced the bankruptcy judge that their plan of re-org (with new, lower priced labor contracts)would result in more money to pay their debtors than what they would have got in liquidation, then the judge would have likely approved it and GM would have "been restructured and emerged from bankruptcy". The average person thinks the corporate bankruptcy is something like personal bankruptcy, but in fact it works very differently. GM would have gone the route that we have seen with most major airlines, steel companies, etc. It takes some inside knowledge of corporate bankruptcy to fully appreciate how our laws were completely disregarded so that some politicians could reward some special interest groups. I'm still surprised that there was no public outcry or congressional investigation to the whole thing.
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