General Motors

(GM) - Get Report

and

American International Group

(AIG) - Get Report

, companies that once dominated their industry, are staring at the abyss called bankruptcy.

The difference between the two is GM appears to have a plan that is being executed. AIG had wanted to sell non-core businesses and retain its insurance units, but that strategy appears to be failing. A

report

today says some bidders for the company's Asian subsidiary, the region's largest life insurer, have dropped out.

A hedge fund manager could buy both companies for a little more than $2 billion, based on their stock-market values. That makes them small caps. GM, the biggest U.S. carmaker, is worth about $1.4 billion, according to investors, down from a record $56 billion earlier in the decade. AIG, the largest American insurer, has a value of a little more than $1 billion. It was once worth $258 billion.

AIG, which received $173 billion in government aid, may announce the largest loss in U.S. corporate history next week. GM releases its results, most likely a loss, tomorrow.

Both companies appear desperate for assistance. Fighting for the attention of the White House, they could have the door firmly closed in their faces.

GM is begging for additional

support

. As it glances at AIG, the carmaker must wonder how the insurer got 10 times what GM is asking for. AIG is apparently still welcome at the money trough.

Under normal circumstances, both companies would have fallen into bankruptcy. A combination of circumstances, both political and financial, has created a most unusual predicament for the government.

The disappearance of GM would resound throughout the U.S. and elsewhere, putting jobs and supporting industries at risk. AIG has no need to evaporate. It simply needs to divest its constituent entities.

Both companies might need support to move forward, and the government can provide help. The U.S. may want to give even more -- clearly, the government doesn't want to see either company losing taxpayer dollars.

GM must seriously consider the option that is being mentioned more frequently -- restructure under Chapter 11. AIG, for its part, could be sold, lock, stock and barrel. Neither company would truly disappear, but be reborn into a world where good decisions are rewarded and bad ones punished.

Gavin Magor joined TheStreet.com Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.