The US government may force General Motors Corp. and Chrysler LLC into bankruptcy in order to receive repayment of $17.4 billion in federal bailout loans, by placing the two auto companies in Chapter 11 bankruptcy protection. The move is one of the options understood to be considered by government advisers.
Chapter 11, which is designed to allow a company to undertake drastic restructuring measures while protecting it from its creditors, would ensure that taxpayers would be paid out first in the event that either company actually collapsed.
On the other hand, both companies have previously said that a move into Chapter 11 would destroy them, as customers would lose confidence and be scared off, and many suppliers would stop working with them.