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General Motors May Seek Bankruptcy Protection

Posted By admin || 5-Mar-2009

According to an article in the Star-Telegram auditors expressed serious doubt about General Motors' ability to continue operations.

The article said:

"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.

The automaker has considered three bankruptcy scenarios, all of which would cost the American taxpayer at least $40 billion. General Motors has already received $13.4 billion in taxpayer backed federal loans and hopes to receive another $30 billion. But if General Motors cannot demonstrate that it is viable by March 31, 2009, they may be forced into bankruptcy

As this automaker drama plays out, the prospect of bankruptcy seems to be highly probable if not imminent. A bankruptcy of General Motors would be a huge blow to our already weakened economy. If General Motors files for bankruptcy, the giant automaker will be forced to shed tens of thousands of jobs and/or slash worker salaries significantly.

Plus, I am not sure if a General Motors bankruptcy will guarantee that the company will survive. Has anyone considered the possibility of General Motors liquidating completely in bankruptcy? We need to take this possible scenario into account; because the fallout from such an outcome would be devastating for hundreds of thousands of Americans who are directly or indirectly dependent upon the American auto industry.

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