[bojan]

Thanks guys.. I've got it now.

Originally Posted by sjastro

.....This is because the small mass resides in the lowest possible gravitational potential energy state.

If you shrunk the large mass and kept the small mass at the same distance, the energy required to remove the small mass out of the well increases......is no longer in lowest possible gravitational potential energy state. You require energy to keep the small mass at the same distance plus the energy to remove the mass out of the well.

I will stick to Steven's explanation as above, it is most precise..
I didn't realise that shrinking (collapse, increasing density) of the bigger mass changes the energy level distribution of the system.

EDIT:
Or, the the energy of the system remained the same, however due to collapse of the bigger mass, part of it's potential energy is converted into potential energy of the smaller mass.. Please confirm.

Guys, we have to be more clear in answers to some basic questions. Otherwise we are just creating confusion among some people..