Interesting. I wonder if that's a bluff or if they really mean it. I personally find it a bit hard to get a firm grasp of the overall situation because it seems that different sources all seem to have completely different theories on who's fucked or not and why.
I think what it comes down to is just poor management, lower marketshare in the most profitable categories, and retarded high prices for factors of production. To be honest, I didn't think the main terms for the bailout were all that unreasonable (or at least the ones that I saw). 1$/year CEO, 20% paycut to management, price match Toyota and Honda domestic workers wages (I thought these actually matched or even surpassed those of the big three in many cases a few years ago, but I guess I was wrong on that), and to make UAW take over healthcare (this is probably the biggest issue if it's even correct. I've seen two different stats - one that this was the terms of the buyout, the other that this was the deal Ford cut in 2007. I haven't done the legwork). What else do they want really? Either way you look at it the UAW is going to take a hit and it's not really beneficial to anyone to have a whole shitload of people laid off because the most stubborn private sector union in the world was typically inflexible. I suspect that chapter 7 won't happen and it will just purely be a chapter 11 issue. GM still has quite a bit of room to work with and is in dire need of restructuring (12 brands?).
What I haven't been able to find was the financing terms of the bailout. Is it purely a flat loan, or do WTO regulations dictate interest actually has to be involved?