Why not put GM through bankruptcy directly?
And frankly, this plan doesn’t make survival look all that likely at anything remotely approaching GM’s current size–not if by “survival” we mean “weaning itself from taxpayer cash”. The government can guarantee warrantees. But it will be less effective at shedding all sorts of obligations than bankruptcy court. The administration won’t be reorganizing the way a bankruptcy does; it will be negotiating. To be sure, bankruptcy judges, too, negotiate, particularly among the various creditors. But they do so with the power to cramdown firmly in their hands. If the administration wants to wield that kind of power, it will have to find new and inventive threats to level at the creditors. They may not find them. And if they do, it’s not really in the best interests of the nation for the government to find lots of new and innovative ways to threaten private investors.