Count on management not to tell the truth when things are really bad. General Motors (NYSE: GM) CEO Rich Wagoner keeps saying bankruptcy is not an option for the car maker. It would ruin too many suppliers and kill consumer confidence, pushing more and more customers into the hands of the competition.

Of course, what Wagoner says does not matter. Once GM's creditors get to the point when they have not been paid for several months, they can go into court and press the issue. Bingo. GM has to seek protection.

According to The Wall Street Journal (subscription required), "Members of General Motors Corp.'s board of directors are willing to consider 'all options' for the ailing auto maker, including an eventual filing for bankruptcy protection."

What would a GM bankruptcy look like? For starters, common shareholders and many preferred holders and bond holders would lose most or all of their money. Suppliers would have their receivables from the big car company cut, perhaps by huge sums. But, at least they would not have to lose their largest customer.