To sum up your case, it can be said that:
a) You did not encash properly on your closeness with your top boss. You could have brought new systems and processes in the company. You could have convinced the importance of process oriented approach rather than person oriented approach.
b) You have failed to manage the office politics properly
c) Worse still, you have failed to respect to seniority of a person in the organisation. If you were Manager then what was the need to get on General manager's nerve? You could have handled the spread of disinformation professionally.
So what is the solution? - The solution lies in talking to Chairman and restoring his faith on you. For the sake of interpersonal relationship, you cannot put your career at stake. Ask for personal interview of the Chairman and clear the air. Show your willingness to tender apologies to GM.
20th March 2015 From India, Bangalore