The company could raise money by unloading assets, but which ones? In October, it tried to refinance its headquarters, downtown Detroit’s Renaissance Center, with the city’s public-employees pension fund. G.M. was flexible; it was willing to sell the building and lease it back, or even put it up as collateral for a loan. But the fund declined, which is a little like, say, the City of Chicago rebuffing the Cubs. G.M. has also put Hummer on the block, but who wants a maker of gas-swilling S.U.V.’s? A federal bailout might happen, but the U.S. government just gave Detroit $25 billion to develop fuel-efficient cars, so additional funds might be tough to come by. Besides, betting on a bailout is no way to run a company.

That leaves bankruptcy. The main advantage of Chapter 11 is that it would give G.M. a chance to wipe the slate clean and do what pretty much everyone agrees it needs to—reduce its number of brands and cut costs. Right now, it can’t take those steps because the opposing parties (car dealers, labor unions, and suppliers) are strong enough to push back. When G.M. killed Oldsmobile, in 2004, it was forced to spend more than $1 billion to buy out all the disgruntled Olds dealers. The company still has eight domestic brands but probably needs only two or three—Cadillac, Chevrolet, and perhaps GMC. The others (Buick, Hummer, Pontiac, Saab, and Saturn) need to be sold or folded. That means about 60 percent of G.M.’s more than 6,000 dealers have to go, says automotive guru Steve Girsky of Centerbridge Partners, a private equity firm. A ballpark estimate for shutting down those dealerships is about $4 billion. G.M. can’t spend that kind of money at the moment, but in a bankruptcy filing, it would essentially be taking itself hostage to force dealers into accepting less favorable terms.

The process would also help the company secure better deals with suppliers and the United Auto Workers union. G.M. is on the hook for about $11 billion to settle claims with its biggest parts supplier, Delphi (formerly part of G.M., and currently mired in its own Chapter 11 proceedings). The U.A.W. has already agreed to let G.M. restructure its pension and health-care obligations for retirees, but those savings won’t show up until 2010. Bankruptcy proceedings would give G.M. a better chance to accelerate the timing.

Of course, there are downsides. Shareholders would be wiped out, but the stock is down 74 percent this year alone, so they’ve been pretty much obliterated anyway. The more serious objection is that it would be a catastrophe for vehicle sales. No one, the theory goes, will buy a car from a bankrupt company out of fear that the warranties would be worthless and parts wouldn’t be available. But G.M. has access to plenty of $1,000-an-hour lawyers, and one of them should be able to find a way to guarantee warranty protection to G.M. vehicle owners. Get a court guarantee; buy coverage from Midas or Hertz or whomever.

The bottom line: General Motors can no longer be Generous Motors, as the automaker was long called in Detroit. A successful bankruptcy would require warranty guarantees, a public-relations blitz to reassure consumers, and a solid plan to inject capital into a revamped and rejuvenated company. “There’s a reason the corporate bankruptcy law exists,” says Daniel Montgomery, of Montgomery Advisors, a restructuring firm. “If it’s used effectively, it’s better than letting a franchise melt down.”