Auditors cite 'substantial doubt' about GM's survival

[Turborama]

Source: AFP

CHICAGO (AFP) — General Motors warned it could be liquidated through bankruptcy after its auditors voiced "substantial doubt" about the struggling automaker's ability to stay afloat in an annual report released Thursday.

GM is currently funding its operations with 13.4 billion dollars in emergency loans from the US government and said last month it will need an additional 22.6 billion in government aid if it is to survive a collapse of global auto sales amid a deepening recession.

The independent auditors concluded that GM's "recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," GM said in the report filed with securities regulators.

A week ago General Motors warned of a "challenging" year ahead as it posted a 30.9-billion-dollar 2008 loss, bringing the tally from four consecutive years of bleeding balance sheets to a whopping 86.6 billion dollars.

GM has asked the US Treasury for an additional 16.6 billion dollars and said it would need another six billion from the governments of Canada, Germany, Britain, Sweden, and Thailand. GM warned in its report that it "could potentially be required to seek relief through a filing under the US Bankruptcy Code, either through a prepackaged plan of reorganization or under an alternative plan, which could include liquidation" if it is not able to obtain those loans. GM has repeatedly said it will likely be liquidated if it is forced into bankruptcy protection because consumers would be wary of buying its vehicles.

Read more: http://www.google.com/hostednews/afp/article/ALeqM5jBz2Z0tK6Xsvqcva75Z2e-WCdczw

[Romulox]

1. What do the auditors have to say about AIG? Are there even any auditors?

Anytime the Obama admin wants to slide a few hundred billion more at Wall Street, another anti-GM story comes out.

Curious...

[navarth]

2. Yeah how about that

It's interesting how the banks are 'too big to fail' but GM is talking bankruptcy.

And in either case the fat cats at the top will walk with golden parachutes while the workers suffer.

Disgusting.

[amandabeech]

11. AIG has outstanding stock trading on the NYSE.

Its holding company must file with the SEC as a matter of law and NYSE rules.

If it hasn't filed by now, it probably has filed for an extension, which I think goes until mid-February. It's been a while since I practiced law in this area.

If it doesn't file, it will be eventually removed from trading on the NYSE, which situation I think AIG will try to avoid.

Whenever it files, I would expect that it will need to amend its filing at least once, perhaps even before the first quarterly report is due.

GM's "going concern" auditor's opinion is serious, but I've seen companies limp along with "going concern" opinions for a few years before giving up the ghost. Who knows what will happen.

[Romulox]

20. So does GM. This has nothing to do with the SEC, and everything to do with the bailouts. nt

[ConcernedCanuk]

3. Well, they killed the EV1 - crushed thousands of well-needed vehicles

.
.
.

and set back the development of emission free vehicles for over a decade

let them go

there are lots of other car-makers out there to pick up the slack,

and before anyone gets all excited about the job losses,

those skilled workers will be needed in other car factories.

The executives?

They can go piss up a rope

[Romulox]

4. Hey Canuck, I noticed you didn't show up on the recent threads about Toyota's troubles

Curious...

[ConcernedCanuk]

5. I remember you . . .

.
.
.

[Romulox]

7. I remember you too. And I remember that you didn't have a thing to say about Toyota's troubles.

Strange that you didn't comment about Toyota's recent troubles (since you're such an expert on the auto-industry!)

[WriteDown]

13. Once again, this NEVER happened.....

Its a great urban myth, but its patently false. Read and learn

http://blogs.edmunds.com/karl/Vehicles/GMEV1/

[remedy1]

6. Imagine that.

Auditors actually doing their job...

[Romulox]

8. What do the auditors think about AIG's viability?

Or are they not "actually doing their job" as to that company?

[AllentownJake]

9. AIG is now a part of the Federal Government

We own AIG.

[Igel]

12. We'll find out when they file their annual report.

The GM auditors weren't required by the bailout or by Congress, except a general requirement for publicly traded corporations. The board hires them, often with executive input, and is usually responsible for accepting the report.

Even then, getting an independent audit is usually something that a decent board requires, or even a crappy board in difficult fiscal times. The board I was on required a fairly high-level annual audit and would pick one division for a low-level audit. The division picked hated it because the auditors would come in for a few weeks to check accounting practices and verify actual reconciliations and postings. They'd usually recommend something, and often we'd follow their recommendations.

Apart from the annual report, auditor's findings need not be released to anybody beyond the board. Management usually knows what's in the reports, often (but not always) before the board does. Some of what's in the auditors' report makes it into the annual report; much doesn't, and what makes it in the annual report is often the subject of discussion with the CEO's folk or the board's finance committee.

"Not viable" often has the caveat "given current practices or economic situation", and doesn't necessarily mean "this place is going to be gone in 6 weeks."

[Romulox]

18. Gimme a break. These audits are part of the humilitating "restructuring plan" GM is being forced

to submit, (but AIG and Citi are not, despite receiving many times more taxpayer $$$. :hi:

[guidoo]

10. that is what no one seems to get

Almost the entire auto industry is in trouble. Toyota is seeking loans from Japan and laying people off. Toyota may be in slightly better shape as they were not as dependent on the SUV market as US auto makers.

[sarcasmo]

14. Bankruptcy is all about killing the legacy payments.

[gula]

15. Bingo

[high density]

17. Liquidation kills everything

See Circuit City.

I think this is a scare tactic to extract more money from the Federal Government.

[sarcasmo]

21. The Corporation doesn't want the money from the Government. They want Bankruptcy

No Pensions and no Health Care, crush the Union and open under a new name paying people ten bucks an hour.

[Romulox]

19. Will the Obama admin force GM into bankruptcy and break the UAW? nt

[JFKfanforever]

16. The CPA audit firm is DT... Article posted fails to mention this...

However the Aussies gave the name of the auditors here:

http://www.theaustralian.news.com.au/business/story/0,28124,25146445-5017997,00.html