According to a report in the Wall Street Journal, General Motors' bondholders are drawing up legal arguments against the company's bankruptcy plan that would divide GM into "good" and "bad" halves.

Under this scheme, the profitable elements of the company would be split off into the so-called "good" GM, while less profitable units would comprise the "bad" half, whose long-term survival or rehabilitation would be questionable.

Bondholders fear heavy losses on their investments in the event of such a restructuring. "People familiar with the matter" said an ad hoc committee representing the bondholders have voiced their concerns to the Obama administration's automotive task force.

Last week Standard Poor's cut certain debt ratings for both General Motors and Chrysler, pointing to the low probability of recovery for debtors if either company defaults on loans or files for bankruptcy.

Both GM and Chrysler are currently operating on an infusion of $17.4 billion in federal loans. Their long-term viability plans, presented in March, were rejected by the Obama administration. Chrysler was given thirty days and GM sixty days to develop more stringent restructuring options, and a "planned" bankruptcy has not been ruled out.

Last week, in announcing a large federal fleet purchase from the troubled Detroit Big Three, President Obama said, "I am 100 percent committed to a strong American auto industry.. . . I will continue to ensure that we are working to support the American auto industry during this difficult period of restructuring."