After months of pressure from the federal government to push down General Motors’s and Chrysler’s debt loads, a deal remains far out of reach. With the promise of further federal bailouts, no debt-holders wants to make concessions—accepting just 30 or 40 cents on the dollar, and much of that in possibly worthless stock—when holdouts could wind up paid in full.

Bailout-free Ford announced yesterday that investors agreed to swap nearly $10 billion dollars in its debt for cash and stock, reducing its total debt burden by 28 percent. The price: about 38 cents on the dollar. After the late-afternoon announcement, Ford stock rallied, gaining 16 percent.

Without a government backstop, Ford could argue credibly that its debt-holders would take a beating if the company were forced to file for bankruptcy. But that seems increasingly unlikely: Ford’s prospects have been looking up, as car-buying consumers flock to the only Detroit manufacturer that hasn’t taken taxpayer dollars. In any case, without the uncertainty of government financing, Ford’s debt-holders were able to put a firm value on its bonds and then choose whether or not to accept the automaker’s buyback terms.

Its rivals’ creditors, locked in a game of chicken with the federal government, cannot. The result is a stalemate that’s impeding GM’s and Chrysler’s turnaround plans—another cost of doing bailouts instead of straightforward bankruptcy.