I'm not up on all that took place. I believe bankruptcy law was changed for this bailout and that's what screwed the bondholders. There was a lawsuit or lawsuits connected to bondholders after bailout, don't know the results but I understand it basically ended up that lost bondholder dollars more less benefited the UAW pension fund.
Contract law was trampled as claims that were supposed to be equal received unequal treatment. GM and Team Obama chose a debtor-friendly venue of NY by starting an action against itself when GM-owned Saturn of Harlem initiated a claim against GM in that court.
Debtor-friendly Judge Gerber ruled against bondholder group that sought due process and a negotiated settlement. Treasury Department, through Auto Task Force member Harry Wilson threatened full liquidation of GM if the court did not agree to Task Force/Obama’s plan. The plan was enacted as sought and bondholders received a fraction of what the UAW got. Approximately 10 to 15 cents on the dollar compared to a typical negotiated bankruptcy which would have seen them get 40 to 50 cents on the dollar.