A US taxpayer

GM's Bond Restructing Plan

Bankruptcy without Govt intervention is a good option for bondholder.

Give away under-funded and poorly managed pension to PBGC, cancel Veba and strip out all assets and sell it off to foreign company, and I bet vulture funds make more than 25 bucks per bond. So there is a return potential. But all others are worse off;

Shareholders get $0, of course.
Workers do lose job next 2-3 years, and many lives will be ruined.
Likely this will extend recession much longer.
No bottom for Michigan housing.
Very high political cost to democrats

However, there is no upside for bondholders to give up their rights as lenders. If GM thinks the bond holders will take equal exchange with equity for 50%, they are sadly mistaken. No one believes that GM/F CHrysler is a going concern with or without Govt loans, not even UAW leader Gettelfinger, who avoded answering today whether UAW is willing to take GM equity for its member's 401 k. He sure made it sound like "we will take our free ride with govt money but are not willing/foolish enough to share the equity risk."

If anything, bondholders are likely to ask US Govt to guarantee the debt, not exchange it for equity share. I can see new addition to Barclay's agency debt index.

So you are looking at at least 16 billion more of the US Govt line of credit for GM/F/Chrysler, for total of what, 53 billion and more?

Let's review that planned bankruptcy option again.