We are in the midst now of an arranged bankruptcy of Chrysler, where it would be purchased by Fiat, all coordinated by the federal government at a suppressed price. We've seen this before, where banks were seized by the FDIC and then sold to other banks, whereupon shareholders lost everything, and unless special deals were made then bondholders lost everything too.
With Chrysler, the federal government does not have seizure power, but the Treasury Department can twist the arms of TARP lenders with exposure to Chrysler to comply with the plan. Non-TARP lenders to Crysler, and stock and bondholders of any sort, are compromised by the deal and their only recourse is to file legal action, which surely will happen.
Unlike bank seizures, this is going to be messy, I suspect worse even that Wells Fargo's purchase of Wachovia, which was bad enough.
Having owned a Dodge pickup—and not that I didn't like the truck but I was distinctly unimpressed the way the company operates and treats its customers—I'm left thinking the government shouldn't lift a finger for Chrysler.