It’s a bit sad. Until this article, I didn’t know about non-Chapter-11 bankruptcy. I didn’t even know there were other types of bankruptcy. I used to watch evening news and I don’t remember them ever mentioning any other type. So in my mind, I equated “bankruptcy” with Chapter-11-style “declare bankruptcy but continue operating”. I’m sure I’m not alone in that respect.
I think that’s where all the anti-GM-bailout sentiment comes from. Why bail out General Motors when they can file Chapter 11 bankruptcy and continue operating as normal? Well, as the article points out, because it’s likely that GM will have to file for Chapter 7 bankruptcy—closing up shop and liquidating assets. That would be a nightmarish scenario. (via Paul Krugman)