GM faces the reaperEnlarge Photo
Between lackluster sales, the sagging economy, and all that bailout mishegas, things are rough at General Motors. For weeks, we've been waiting for signs of improvement, convinced that the situation can't get much worse.
We hate it when we're wrong.
GM's auditors at Deloitte & Touche have submitted a report to the U.S. Securities and Exchange Commission that says, in essence, "We're not sure about this at all--and by 'this', we mean GM's ability to keep its doors open." Specifically, the filing says that "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" [emphasis and link ours, natch].
Now, in reality, this doesn't mean much for GM--at least not directly. The company will move forward with its restructuring plan and continue its full-court press for bailout support. (You'll recall from our handy-dandy Bailout Bonanza wall chart--suitable for framing--that General Motors has received $13.4 billion so far, with another $16.6 billion in the hopper, bringing the grand request to a nice, tidy $30 billion.) Those funds aren't put in jeopardy by the Deloitte & Touche report, since there's no clause in the General's agreement with the feds that penalizes the company if auditors raise doubts about the company's viability. Whew.
No, what the auditors' report does is increase tension, both at GM and among the general public. It raises the Boogeyman of Bankruptcy--who's looking a lot more like Casper the Friendly Ghost these days--and it puts a dent in the General's increasingly well-worn brand. Too many more of those dings, and GM might as well just bite the bullet and dive into Chapter 11, whether the governor likes it or not. Heck, at least we could stop waiting for the other brake shoe to drop.