Naw Clay, you're full of sh!t.
It's all to gain the support from the UAW and their fellow travelers for the bailout since BK is the route to breaking the brain-stem sucking union contracts.
BK would indeed work. Ford would likely avoid it, Chrysler deserves it and GM might be cut up into more reasonably-sized operations. Even 7 might be beneficial by allowing competitors and other n'er-do-wells an opportunity to come in and buy some chunks.
As I and others have said previously, we don't need no stinkin British Leyland on these shores.
This "sky is falling" BS is getting old. A few years ago, the BKs and mergers in the airline industry raised fears of not having an American flag carrier. Nobody seemed to give a good golly damn about the steel workers when LTV and the others started falling away.
There are many rules and theories which apply to capitalism, but the most basic one is this: sh!t happens.