Camaro5 Chevy Camaro Forum / Camaro ZL1, SS and V6 Forums -
Go Back   Camaro5 Chevy Camaro Forum / Camaro ZL1, SS and V6 Forums - > Members Area > General Automotive + Other Cars Discussion

Thread Tools
Old 03-05-2009, 09:29 AM   #1

ArcAngel's Avatar
Drives: 07 Black Cobalt SS/SC
Join Date: Aug 2006
Location: Manalapan-NJ
Posts: 2,872
Send a message via AIM to ArcAngel
Auditors"Substantial Doubt " GM can survive

Auditors: 'Substantial Doubt' GM Can Survive

Thursday , March 05, 2009

General Motors Corp.'s auditors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan.

The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission.

"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for the accounting firm Deloitte & Touche LLP wrote in the report.

In pre-market trading, GM shares fell 14 percent from Wednesday's close, to $1.90.

GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008.

The company faces a March 31 deadline to have signed agreements of concessions from debtholders and the United Auto Workers union to show the government it can become viable again. On Feb. 17 it submitted the restructuring plan to the Treasury Department that includes laying off 47,000 workers worldwide by the end of the year and closing five more U.S. factories.

GM said in its filing that its future depends on successfully executing the plan.

"If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code," the Detroit-based automaker said in the annual report.

GM, the report said, is highly dependent on auto sales volume, which dropped rapidly last year. "There is no assurance that the global automobile market will recover or that it will not suffer a significant further downturn," the company wrote.

GM has said it wants to avoid bankruptcy protection because it would scare off customers. Car buyers, the company has said, would be reluctant to buy from an automaker in bankruptcy protection due to fears that it wouldn't be around long enough to honor warranties or make replacement parts.

GM, in its viability plan submitted to the Treasury last month, said it explored three bankruptcy scenarios, all of which would cost the government more than $40 billion.

Chief Operating Officer Fritz Henderson said at the time that the government would be the only place the company could get financing for bankruptcy reorganization, because the credit markets are frozen. The worst-case bankruptcy scenario would cost the government $100 billion, Henderson said, because revenue would severely drop due to a lack of sales.

He said there is not a lot of research about whether people would buy cars from an automaker in bankruptcy protection, but "that which is there suggests that sales fall off a cliff."

GM warned last month that its auditors may raise the "going concern" doubts, and industry analysts said auditors' statements may trigger clauses in some of GM's loans, placing them in default.

But the company said in its filing that it has received waivers of the clauses for its $4.5 billion secured revolving credit facility, a $1.5 billion term loan and a $125 million secured credit facility.

"Consequently, we are not in default of our covenants," the report said. "If we conclude that there is substantial doubt about our ability to continue as a going concern for the year ending Dec. 31, 2009, we will have to seek similar amendments or waivers at that time."

GM spokeswoman Julie Gibson said there is no clause in the terms of the government loans that places them in default if the auditors raise doubts about GM's ability to keep operating.

"That was not a condition of the loan. It's not in the agreement," she said.
Through HIM you believe in GOD, who raised HIM from the dead and Glorified him..
ArcAngel is offline   Reply With Quote
Old 03-05-2009, 09:29 AM   #2
Faith Keeper
djsnoflake's Avatar
Drives: 2012 Silverado LTZ, 2010 2SS/RS
Join Date: Nov 2008
Location: Saskatoon, Saskatchewan Canada
Posts: 2,764
djsnoflake is offline   Reply With Quote
Old 03-05-2009, 02:35 PM   #3
Serious Sleeper
tjbusa's Avatar
Drives: 2010 CGM 2SS/RS M6
Join Date: Nov 2008
Location: Lexington,SC
Posts: 3,131
GM auditors raise doubt on viability

News I could do without, I hope this new camaro gets the ball rolling for the american revolution they always advertised. I am glad I have a camaro on order, GM needs support from americans.

Last edited by tjbusa; 03-05-2009 at 03:08 PM.
tjbusa is offline   Reply With Quote
Old 03-05-2009, 08:20 PM   #4

fad1's Avatar
Drives: Future 5th gen Camaro
Join Date: May 2008
Location: Los Angeles California
Posts: 1,108
Honestly, Chevy and Caddy need to leave the crumbling GM virus and start from scratch
fad1 is offline   Reply With Quote

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
GM: company faces a March 31 deadline Supermans General Automotive + Other Cars Discussion 73 03-06-2009 10:48 AM
GM: 'Substantial doubt' about continuing Scott@Bjorn3D Off-topic Discussions 1 03-05-2009 06:02 AM
Camaro to survive GM plan Cyberfan 5th Gen Camaro SS LS LT General Discussions 33 03-01-2009 03:55 PM
Saturn just may survive! Silver Streak General Automotive + Other Cars Discussion 4 02-19-2009 09:46 AM
MERGED: Has anyone read this (bankruptcy) about GM? LS3SSRS General Automotive + Other Cars Discussion 460 11-23-2008 10:54 PM

All times are GMT -5. The time now is 05:18 PM.

Powered by vBulletin® Version 3.8.9 Beta 4
Copyright ©2000 - 2018, vBulletin Solutions, Inc.