March 5, 2009
GM auditors post official warning
Auditors for U.S. auto giant General Motors Corp. formally warned Thursday that the company's future is at substantial risk.
In a Securities and Exchange Commission filing, auditor Deloitte & Touche said the company's losses, lack of cash and negative net worth put the giant automaker in serious jeopardy, The Wall Street Journal reported.
GM lost $30.9 billion in 2008 and has asked the federal government for billions of dollars in loans to stay afloat. Investors anticipated the auditor's warning, as GM announced its losses last week, ahead of the financial report, the Journal said.
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.
Besides its obvious signal to the government and leverage for politicians who prefer to stop bailing out the company, the formal warning could have allowed creditors to demand immediate repayment of more than $6 billion in loans.
GM has signed waivers that prevent creditors from moving in but the waivers end if the government doesn't extend additional loans to the company, the Journal said.