According to Standard & Poor’s lead automotive credit analyst, Robert Schulz, the three biggest US automakers - General Motors Corp., Ford Motor Co. and Chrysler LLC - may be forced into bankruptcy as the global credit freeze has dampened US sales.

With stalled car sales, it has become virtually impossible for GM and Ford to borrow money, resulting in plunging their stock prices to near pocket-change levels. Though privately held Chrysler says it is hitting its financial targets, bankruptcy talk is enveloping it as well.

Schulz said the ‘trigger’ for a forced restructuring under bankruptcy protection would be based on the automakers’ ability to preserve liquidity as US sales slid 27% last month, the maximum in 17 years.

Even as the three automakers vow to stick with their turnaround plans for boosting cash, Schulz said in a Bloomberg Television interview in New York that: “Macro factors could overwhelm them at some point.” However, he added that any bankruptcy filing would be a last resort, not a “strategic” decision.

Moreover, S&P said that its debt ratings for GM and Ford were already at six steps below investment grade at B-, and may further be lowered because the automakers face a “serious challenge” in 2009.

In response to S&P’s report raising the prospect of another ratings cut, Ford spokesman Mark Truby said that Ford has a ‘cash cushion’, referring to $23.4 billion borrowed in late 2006 to help pay for shutting plants and cutting jobs while developing new models. As regards GM, Martin J. Bienenstock, chairman of business solutions for Dewey & LeBoeuf LLP, said: “GM’s turnaround may be achieved outside bankruptcy with its $15 billion savings program and potential electric car.” 

Whatever the plans, the fact is both GM and Ford were already trying to keep their balance sheets afloat, before a ‘financial tsunami’ swept across the globe this week. Referring to the dreaded word, ‘bankruptcy,’ Erich Merkle, an auto industry analyst of accounting and consulting firm Crowe Horwath LLP, says: “You can’t rule it out.”

Merkle thinks the automakers will use the real threat of bankruptcy to force workers, suppliers and other creditors to take financial concessions. In essence, we might see one or more of the ‘Detroit Three’ do a Chapter 11-style reorganization outside of the bankruptcy court.