A Chapter 11 proceeding would take a long, long time to come up with a plan of reorganization that could be approved by the court. (Think how long it took for United Airlines to get a plan of reorganization approved.) Agreements from the UAW and the suppliers would be almost impossible to get. The proceedings could take a couple of years.

If the pollsters are correct and 80% of buyers wouldn't consider buying a car from a bankrupt company, there wouldn't be much of an auto industry left to save after a year or two in bankruptcy.

I agree that bankruptcy proceedings would be the best way for the car companies to finally resolve their out-of-whack cost structures and business model. But given the parties that would be at the table, there's little chance that it could happen in time for them to avoid liquidation.

What might be worth a try on the part of the new administration is to call the parties together--the management, union, suppliers and anyone else with an interest. Tell them that the only way that the government would provide any funding would be that the parties agree to a plan of reorganization that could be approved in a "pre-packaged" bankruptcy filing. Everyone would have to decide how much of a "haircut" they would take in exchange for government funding and a chance at survival. With such agreement completed, the company could go in and come out of Chapter 11 in a matter of weeks, with the market knowing the bankruptcy would be only temporary.

If the parties at interest refused or failed to reach an acceptable agreement, then the auto companies should be permitted to attempt to survive without taxpayer money. The result will be the same as if we gave them financing, and if they tried to continue to operate without fixing the fundamental flaws in their business model. That would be expensive for everyone, but at least we wouldn't have thrown good money after bad.