Thinking in classical mechanics terms but with the knowledge that $E=mc^2$ let's make the below thought:
Suppose you have a shell of a sphere formed by a mass uniformly distributed over the surface of the sphere. When the radius is large the system has a mass at rest $m_0$. But when we start to lower the radius the system acquires a negative potential energy, thus the mass of the whole system becomes smaller and smaller as the radius diminishes.
If we suppose that the negative mass corresponding to the negative potential energy is inside the sphere than the mass that attracts itself diminishes as the radius gets smaller and smaller, thus allowing for the singularity to be smoothed when $r=0$ and then I may suppose (before doing calculations) that we are never able to arrive to a point where the mass is 0 before the radius becomes 0.
If instead we suppose that the negative mass resides in the space outside the sphere, than that negative mass does not interfere with the gravitational force on the sphere and thus the matter of the surface of the sphere is subjected to the known gravitational force thus there is a point where at a certain radius the energy of the system becomes 0 and thus to my understanding there exists nothing so the matter is annihilated and has been converted to energy during all the contraction trajectory where we have to extract energy to keep the system stationary and stable.
In case we don't keep the system stable, than the system should oscillate around the 0 position and thus should be dampened by the emission of general relativity gravitational waves (I suppose) arriving to be annihilated any way at the end.
So in both cases we have a decay of matter into energy. So the questions are:
a) the potential energy is inside or outside the sphere and what is the outcome of the experiment?
b) what else can we derive?