GM's decline over the course of this year wasn't enough to convince bondholders and the UAW to grant any concessions, but recent reports that the carmaker was in precautionary preparations for filing a Chapter 11 may have galvanized action on the part of the bondholders.

Allowing GM to go to bankruptcy court would leave bondholders in the dark as to the company's future outcome. Furthermore, the previous reluctance to engage GM's demands from bondholders may be starting to wane as bankruptcy becomes the most probable outcome of GM's future. In fact, one bondholder with a large stake in the company is even reviewing which bankruptcy courts would be most likely to benefit bondholders, ruling out Michigan courts due to their proximity to the issue and the potential for emotional flare-ups from the public, reports Automotive News.

At the same time, the U.S. government is seeking other avenues to avoid such a situation, including the possibility of swapping over $13 billion in GM debt for additional equity in the company. This would help improve GM's balance sheet, but the company still has almost $50 billion in debt held by its bondholders and the UAW alone.

If bondholders refuse to budge, then GM's ability to meet the Presidential task force's June 1 deadline will be severely restricted, but GM's current demands from bondholders may be too onerous for them to accept.

Should a bankruptcy filing go ahead, it remains uncertain as to what position bondholders and the UAW would take. Currently, experts are predicting that if GM were to enter bankruptcy court and be split into a profitable half and an unprofitable half via an asset sale, then the company may have a chance of re-emerging - scathed, but still alive - as a viable carmaker.