Friday, March 06, 2009

GM Defends Viability Plan Against Deloitte Doubts on Going Concern

In the recently issued March 4th financial year 2008 10-K annual SEC filing for General Motors Corporation, Deloitte & Touche, its public auditors surprised everyone by expressing serious doubt about GM’s ability to continue as a going concern in their auditors opinion to GM’s financial statements. Not that the auto industry’s woes are not publicly known, but a definitive statement on “substantial doubts” on a “going concern” are strong words to place in a public document. This can immediately trigger a number of covenants and provisions in bondholder contracts to potentially lead to repayment of principal and eventual bankruptcy. However, GM has been able to negotiate with its lenders to forgive at least this breach of covenants....

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