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					Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt" about the company's ability to

              GM's auditor, Deloitte & Touche reveals in the
              automaker's annual report that there was
              "substantial doubt" about the company's ability to
              continue operations

              Source: http://newsgroups.derkeiler.com/Archive/Soc/soc.culture.cambodia/2009−03/msg00095.html



                    • From: Chim <ChimS1@xxxxxxx>
                    • Date: Fri, 6 Mar 2009 05:42:55 −0800 (PST)

              AUTOMOBILES
              GM bankruptcy fears rise on auditors' finding

              GM's dilemma: Without a bankruptcy filing, the company's structural
              issues may never be resolved. But if it does file, its sales may dry
              up, threatening the automaker's very existence.
              By Ken Bensinger and Nathan Olivarez−Giles
              March 6, 2009
              Who would buy a car from a bankrupt automaker?

              As the state of General Motors Corp.'s finances grows more dire, the
              relevance of that question is growing.

              On Thursday, GM's auditor, Deloitte & Touche, became the latest player
              to beat the bankruptcy drum, revealing in the automaker's annual
              report that there was "substantial doubt" about the company's ability
              to continue operations.

              Lately, faced with huge debts, crashing sales and deep structural
              problems, having borrowed $13.4 billion from the government and
              begging $16.6 billion more, even GM itself has begun mentioning the
              possibility of a bankruptcy filing. Last month, the Treasury
              Department retained a leading bankruptcy firm to advise it on the
              option.

              Supporters of a filing say that it would allow the company to lower
              its debt, reduce its dealer count and rework contracts with the
              unions. But others ponder whether consumers, worried about warranties,
              spare parts and other issues, would be willing to purchase vehicles
              from a manufacturer that's locked in Bankruptcy Court.

              GM finds itself in a dilemma: Without filing for protection from its
              creditors under Chapter 11 of the U.S. Bankruptcy Code, the company's
              structural issues may never be resolved. But if it does file, its

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              GM's auditor, Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt"
Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt" about the company's ability to

              sales may dry up, which could threaten the automaker's very existence.

              "Chapter 11 is definitely an option for GM," said Aaron Bragman, an
              auto analyst at IHS Global Insight. "The problem is the collateral
              damage. Beyond what happens to all the people and companies that
              depend on GM, the question is what happens to sales?"

              Part of the uncertainty is that automakers don't go into bankruptcy
              very often.

              The last American car manufacturer to go out of business rather than
              be acquired or merge was Kaiser Motors, which gave up making its own
              line of cars. Before that, according to most accounts, it was Lincoln,
              which entered receivership in 1920 and was bought out by Ford Motor
              Co. for $8 million two years later.

              Beyond the failure of DeLorean in 1982, the most recent example would
              be Daewoo, a South Korean carmaker that went bankrupt in 2000. That
              move was a sales disaster, with revenue falling 37% in the first six
              months after the filing, and profit declining 71%.

              "There's little history of bankruptcy in this industry, but what there
              is suggests sales fall off the cliff," GM President Fritz Henderson
              said last month when the company filed an updated business plan that
              said a full−scale bankruptcy filing could cost taxpayers $100 billion.

              That's more than three times the total amount GM has requested from
              the government for restructuring outside of bankruptcy, and the
              company argues that the cost of bankruptcy is so high precisely
              because sales would collapse. Unlike a ticket purchased from an
              airline, GM and others contend, an auto is a long−term investment and
              buyers expect the company to stick around to provide service and
              parts.

              "I certainly wouldn't buy a GM car if they go bankrupt," said John
              Rossmann, a retired teacher in Tustin who owns a 9−year−old Saturn.
              "You have to think about the warranty. I know GM offers a five−year
              warranty, but if they're gone, it's worth nothing."

              Nobody argues that a bankruptcy would help sell cars. But some contend
              that the company's depressed sales reflect the fact that, in the
              public imagination, GM is already as good as insolvent.

              Since GM filed its first business plan in early December, the
              company's sales have plummeted at a significantly faster clip than
              they had before. In the last three full months, GM's sales have fallen
              43.4%, while overall industry sales have declined 38%, compared with
              the same period a year earlier.

              And sales at Saturn, Saab, Pontiac and Hummer −− brands that GM
              announced it would downsize, sell or close in the December plan −−

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              GM's auditor, Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt"
Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt" about the company's ability to

              have fallen even more, a full 50% compared with the year−earlier
              period.

              "The prospect of a bankruptcy has already affected GM's sales," said
              Douglas Bernstein, who heads the bankruptcy practice at law firm
              Plunkett Cooney. "GM is saying the costs will go up if they file, but
              they're already baked in."

              Bruce Hamlin, owner of two Orange County Chevrolet dealerships,
              estimates that 30% of potential customers who come into his
              dealerships these days raise concerns about GM's solvency.

              "I'd say there are hundreds of people who aren't even coming in
              because of the rumors," he said.

              At Felix Chevrolet and Cadillac in Los Angeles, GM's uncertain future
              has led to a slowdown unlike anything saleswoman Liz Lewis has ever
              seen. Only a few people stop in each day, she said, noting that
              sometimes there are more employees than shoppers. Even on weekends,
              she said, only a handful of customers come in.

              "That's a big change because we can remember a time when we used to
              bring home $5,000 a month in commission," Lewis said. "Now it's
              nowhere near that."

              Beyond the billions it has requested from the U.S. government, GM also
              has turned for help to governments of countries where it operates,
              including Canada, Germany and Brazil. Two weeks ago, after the Swedish
              government declined to put up money, GM pushed its Saab unit into a
              bankruptcy filing there.

              In its annual report, filed Thursday with the Securities and Exchange
              Commission, GM acknowledged that its auditor had found the company was
              no longer viable.

              "Recurring losses from operations, stockholders' deficits and
              inability to generate sufficient cash flow to meet our obligations and
              sustain our operations raises substantial doubt about GM's ability to
              continue as a going concern," the filing read.

              With GM's market capitalization now $200 million below that of the
              Missouri−based Panera Bread Co. bakery−cafe chain, and GM debt trading
              at as little as 20 cents on the dollar, it would appear that Wall
              Street, too, already has baked in the possibility of bankruptcy for
              the automaker.

              "The possibility that GM could file for Chapter 11 bankruptcy
              protection is real," said Brett Hoselton, senior auto analyst at
              KeyBanc Capital Markets. Many in the industry insist that such a
              filing would spell disaster.


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              GM's auditor, Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt"
Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt" about the company's ability to
              "If an airline goes bankrupt, you're only talking about a $400 or $600
              ticket," said Jim Hall, who heads auto consulting firm 2953 Analytics.
              "The ramifications of a GM bankruptcy spread throughout the country
              and the entire world."

              ken.bensinger@xxxxxxxxxxx

              nathan.olivarezgiles@

              latimes.com
              .




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              GM's auditor, Deloitte & Touche reveals in the automaker's annual report that there was "substantial doubt"

				
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