Bondholders Reject General Motors, Bankruptcy Likely

In what will come as no surprise to anyone who has been following the General Motors (GM) saga, the company appears to be - finally - on the brink of bankruptcy. GM tried and failed to persuade bondholders to agree to a debt swap in order to keep the company liquid enough to maintain operations. But when bondholders rejected the company's proposal, it became even more clear that there will likely be no choice but for the auto giant to file for Chapter 11 bankruptcy protection.

Unfortunately for GM, that will likely be the easiest step in a path to recovery that may ultimately prove impossible for the company to follow. General Motors has demonstrated an inability to structure its business model in such a way as to ensure its own profitability - even in prosperous times. Clearly, significant economic downturns hurt most businesses, but they don't necessarily cripple them. With the recent boom years, most logical people would have to assume that a company like GM would be well-positioned to wait out any market turbulence.

But, it is apparent that the company was never really that strong to begin with. With sky-high operating costs and a labor union that essentially cripples the U.S. automotive industry, GM never found its way to firm financial footing, even in the very best of times. And while its stock price may have held its own in recent years, the company was clearly never more than a few lean years away from total collapse. As recently as a few years ago, the thought of GM in bankruptcy would have been laughable to most Americans.