CA = GM
Why not handle the bankrupt California the same way we handled the bankrupt GM?
Split it up into 4 new states, each bearing its proportional part of the indebtedness as a long-term payable. Let a special council of green-eyeshade auditors take full control over each new state for a year or so, until fresh governments can be formed. The new governments must exclude all legislators and top-level executives who served in the original state.
Give special treatment to the Hummer division (ie the San Francisco area, especially including the 9th Circuit Court). Spin Hummer off as a distinct country or fiefdom. Delete all decisions made by the 9th Circuit from American case law. Build an electrified and armed fence between the fiefdom and America. Sell the fiefdom to the Sheikh of Dubai for $1.00 and let him run it
the same way he runs Dubai, which isn't all that different from the way Gavin Newsom runs SF.