1) find a BANK to loan them money.
2) Issue new stock.
3) Sell Assets
4) Cut expenses
Their illegal option was:
Oh, wait, don't bother, you can't do that. It's not there.
But in free markets, these things happen, the market adjusts, and in the end things work out just fine. Especially for the people who pay taxes but don't own Chrysler stock.
I note that no one taxpyer who paid taxes was issued a Chrysler refund check to pay him back. Oh, no. The governemnt got paid, not the taxpayer whose money was put at risk.
If a taxpayer wanted to risk his money in Chrysler or now, Government Motors, he had all the freedom he needed to buy Chrysler stock.
Also, it cost the citizens who owned stock in Ford, GM, Toyota, Honda, etc the gains their investments would have made. That hurt a huge number of people.