From the 1977 thesis (the study linked to in my second post on this thread), looking back on how Congress perceived some of the risks and outcomes of a bankruptcy
"Major confusion developed throughout the hearings [on ELGA] as to what would happen to government contracts should Lockheed go bankrupt. Secretary Packard felt sure that all government contracts would be completed, despite bankruptcy, although delays and cost increases would probably result. But what about major subcontractors of the L-1011 who are also defense subcontractors? Many claimed that every defense contract that Lockheed had with others would have to be renegotiated.
Others argued that bankruptcy would actually improve performance in government contracts. With Lockheed the government was subsidizing an inefficient and wasteful producer. Transferring these contracts to others would result in new ideas, new management techniques and better cost control. Major competitors to Lockheed felt sure they cold take over the defense portions of Lockheed's contracts and would do so with delight. Most of these projects were making a profit for Lockheed during this time frame."
The following was put up by Lockheed as collateral for loans issued by the Emergency Loan Guarantee Board (and thus suggests assets that would be sold in bankruptcy):
1) The entire capital stock of the following subsidiaries -
*Lockheed Air Terminal, Inc.
*Lockheed Electronics Company, Inc.
*Lockheed Properties, Inc.
*Lockheed Shipbuilding and Construction Company
*Lockheed Missiles and Space Corporation
with a total book value of $253 million ($100 million for Lockheed Missiles & Space, $153 million for the rest)
2) Most remaining unpledged improved real estate owned by Lockheed (with the exception being the plant in Marietta, Georgia, which the US government already had a lien on)
3) A security interest in production and other equipment owned by Lockheed and located in LA County.
Incidentally, from February 1972 to December 1973, Lockheed actively sought to merge with General Dynamics. The merger wouldn't have happened - GD wasn't in great shape, and wouldn't be willing to take on long-term debts of up to $700 million (in 1972 dollars). There was also a recapitalization plan with Textron, but that fell through.
Additionally, Lockheed was suffering from other problems in this period - the C-5A program was undergoing delays and cost overruns (which Lockheed had to absorb), the AH-56 was cancelled, and Lockheed Shipbuilding lost some valuable Navy contracts. It was also taking losses on supplying engines for the SRAM. But ultimately, L-1011 is what brought Lockheed to near-ruin.
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Lockheed had substantial debts - there's no way anyone would buy them out before a bankruptcy. It's what would happen after that that's interesting. Among other things, where do the Skunk Works people go? Who picks up the remaining assets of Lockheed when it goes bankrupt, and what happen to them? What happens to the S-3 program - does Ling-Temco-Vought fully take it over? What happens to the widebody market without the L-1011 - is it still big enough for two (DC-10 and 747)?
The implications of ELGA not being passed are also interesting, given the precedent it sets for New York City in '75, and for any future bailouts.
An alternate WI would be to look at what would've happened if Lockheed either lost the C-5 contract to Boeing (which inspired the L-1011 program) or simply rejected the idea of making a commercial airliner before all that much had been sunk into it. L-1011 cost Lockheed tremendously, largely because it had completely overestimated the market for widebodies in the 1970s (in part due to unexpected events (i.e., the oil shock), but also due to an enormously optimistic view of the market by all involved). Lockheed expected, in 1968, to sell 1400 L-1011s, 700 by 1975!
