One remark: you say the only firm who benefits is Cerberus. I have another usual suspect: JPMorgan, who AFAIK is the biggest holder of Chrysler (now junk) bonds and is advising Chrysler on the deal, and other banks. The banks are pushing GM and Chrysler to do this to reduce their exposure to Big Three junk bonds at a time when they’re scrambling to clean up their bloated balance sheets (and generate some much-needed M&A activity in a downturn), and the hapless managements there are listening because… well, because they’re so desperate.

I’m pointing this out because, if the deal goes through and it has the consequences it is so likely to have, it will be an excellent case study on how putting stakeholders (in this case, creditors) before shareholders destroys value every time.