Both General Motors and Chrysler are fearful a bankruptcy would kill whatever consumer confidence the ailing Detroit carmakers may have left but in the latest twist of the saddening U.S. auto industry saga the CEO of GM has revealed that a pre-planned bankruptcy "could work". Rick Wagoner insists that GM could restructure and remain viable without a bankruptcy but there are suggestions the company may be considering accepting a pre-arranged bankruptcy as a final measure to gain a bailout package from the federal government – something many in Washington are demanding.

GM CEO Rick Wagoner has previously stated that bankruptcy was not an option as it would turn away more customers from buying the company’s cars. Chrysler has also previously stated that it does not intend to file for bankruptcy, however the current cash positions of both carmakers say otherwise.

Speaking with The Detroit News this week, Wagoner explained that filing for Chapter 11 would mean that there would be no other (debtor in possession) financing available except from the government – and that would have to be a “huge amount”. He still sees restructuring out of bankruptcy as the best option.

Wagoner also revealed that GM studied a pre-packaged bankruptcy filing that could see the company emerge in one to two months, though he warned that there was a strong chance that it may not work. This would result in the company being liquidated and tens of thousands of jobs being cut.

GM is currently in talks with President Obama’s auto industry task force on a daily basis and is hoping for an additional $4.6 billion in loans by April as well as up to $12 billion in a government line of credit. Fortunately for GM, the task force has said that their goal is to solve the industry's problems rather than see the carmakers enter bankruptcy.