Chrysler drama paves way for GM bankruptcy

General Motors could face a significantly easier path through bankruptcy compared to Chrysler, after the Supreme Court declined to put a halt to the government-backed sale of the automaker to Italian company Fiat.

Indeed, the company may find more resistance from Congress than from the courts in its restructuring bid.

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GM is expected to face many similar issues to Chrysler in its bankruptcy proceedings, both of which were prepackaged by the government.

The sticking point for Chrysler this past week was a suit from holders of the company's debt, which complained that their interest in the restructured company was diminished by the government and labor unions, which took an equity stake in the new Chrysler.

However, GM managed to gain the support of 54 percent of its bondholders prior to filing for bankruptcy -- succeeding where Chrysler had failed prior to bankruptcy.

The bankrupt automaker will face a key test, though, in getting its creditors on board during a court-mandated meeting in New York on July 27.

The Supreme Court sent a signal last week that it was wary of obstructing the path paved for GM in Chrysler's bankruptcy, rejecting Indiana pensioners' effort to toss the prepackaged bankruptcy organized by the Obama administration.

The biggest obstacle, if it even poses a threat to the deal, may be Chrysler.

Some Republican lawmakers incensed by the large government stake in GM have demanded an "exit strategy" for the government's role in the company, or have alternatively pushed for an end to the Troubled Asset Relief Program (TARP), from which assistance funds for the company have been drawn.

"How much thought went in just roughly, from your judgment, went into getting into GM and Chrysler and how much thought went into how do we exit, how do we get out?" Sen. Richard Shelby (R-Ala.) asked members of the Obama administration's auto task force at a Senate hearing this past week.

"I think the term was used earlier, could this be an economic Vietnam?" Shelby added.