Steve, the list of large bankruptcies you provided proves my point, I think. Of the ten companies listed, only Texaco and United Airlines survive in some form today. All of the other eight companies listed that filed for bankruptcy have been liquidated. Only United Airlines (UAL) and the remnants of Texaco survive today.

Texaco had a sound business model and filed for bankruptcy for protection from lawsuits that had been filed with regard to their transactions with Getty Oil. Once those claims were settled by the court, Texaco came out of bankruptcy just as healthy a company as when it filed, but with its legal obligations substantially reduced. Since then it has been acquired by Chevron Oil.

United Airlines is the only company of the large bankruptcies listed that had a faulty business model and was reorganized within a Chapter 11 proceeding. The airline was a far simpler business than an auto company, of course. The main parties with standing in that bankruptcy were the three major unions, the bank lenders, the lessors of the airplanes used by UAL, and the municipalities that owned the airport gates used by the airline. Even with that relative simplicity, it took almost 4-1/2 years for a successful Plan of Reorganization to be confirmed by the court. Of course, that bankruptcy occurred during a time when debtor-in-possession financing was readily available for the banks. That is not the case now. There is no identifiable source of D-I-P financing should one of more of the auto companies declare bankruptcy. The credit markets are currently frozen and only the most creditworthy borrowers can get loans, certainly not a company in bankruptcy.

So the list of large bankruptcies provided pretty much proves the point I made in my original post--reorganization of one or more car companies within a bankruptcy proceeding cannot work. The alternatives are for the government to bail out the car companies, extracting as many conditions and agreements as they can obtain...or refuse to provide bailout/bridge funding and simply permit the companies to become insolvent and be liquidated.

My argument is that the cost to the taxpayers will almost certainly be greater if we permit those companies to fail and be liquidated than it would be if we bailed them out or bridged them with injections of working capital until the economy recovered to the point where they could be self-sustaining.

As I said, either alternative is distasteful and expensive and it's not a pretty picture. The only alternative that I can possibly think of might be for one or more of the companies to file a Chapter 11 bankruptcy and have the government step in to provide the debtor-in-possesion working capital financing. The amount of money the taxpayers might have to inject would be the same as if they simply gave the companies the money with some weak oversight authority. But because the capital would be injected under the jurisdiction of a bankruptcy court, the necessary "reorganization" (reduced payroll, reduced pension and healthcare benefits, reduced pension payments and benefits to reireees, loosened work rules, etc.) could be negotiated among the parties at interest under the big stick of the government who would be threatening to withdraw further financing. That approach might not be any less expensive, but it would at least give the taxpayer a seat at the table in the reorganization of the industry.

The approach with the taxpayers providing debtor-in-possession financing leaves open the question of how long it might take to achieve a reorganization and whether so few cars and trucks might be sold under the cloud of a bankruptcy that there wouldn't be much of an auto industry left after the reorganization was achieved.