Auditors cite substantial doubt about GM's survival

General Motors warned it could be liquidated through bankruptcy after its auditors voiced "substantial doubt" about the struggling automaker's ability to stay afloat in an annual report released Thursday. GM is currently funding its operations with 13.4 billion dollars in emergency loans from the US government and said last month it will need an additional 22.6 billion in government aid if it is to survive a collapse of global auto sales amid a deepening recession. The US Treasury has not yet announced whether it would grant GM the additional loans and is reportedly considering whether the automaker should be restructured under bankruptcy protection. "The administration is very mindful of the challenges in the auto sector," Treasury spokesman Isaac Baker told AFP. "Our team is working around the clock to develop the most thoughtful approach possible to the situation." The independent auditors concluded that GM's "recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," GM said in the report filed with securities regulators. The automaker cautioned in a statement that this assessment was "not unexpected" and "has no impact on the aggressive actions we are taking to restructure our business for long-term viability." A week ago General Motors warned of a "challenging" year ahead as it posted a 30.9-billion-dollar 2008 loss, bringing the tally from four consecutive years of bleeding balance sheets to a whopping 86.6 billion dollars. GM has asked the US Treasury for an additional 16.6 billion dollars and said it needs another six billion from the governments of Canada, Germany, Britain, Sweden, and Thailand. GM warned in its report that it "could potentially be required to seek relief through a filing under the US Bankruptcy Code, either through a prepackaged plan of reorganization or under an alternative plan, which could include liquidation" if it is not able to obtain those loans. The largest US automaker has repeatedly said it will likely be liquidated if it is forced into bankruptcy protection because consumers would be wary of buying its vehicles. In the restructuring plan submitted to the US Treasury last month, GM estimated it would need up to 100 billion dollars in government financing in order to restructure under bankruptcy protection. Other substantial threats to GM's survival include an inability to restructure its debt by June 1, a further deterioration in global auto sales, and the potential failure of key suppliers, GM said in a 25 page discussion of risk factors. The US Treasury could also call back its loans if GM is unable to reach a deal with its creditors and main union by March 31 or if officials determine that GM is not a viable company. GM said it no longer expects it will be able to consolidate Saab and could post a loss in excess of a billion dollars in the first quarter related to the disposal of the Swedish mark. GM further warned that its former parts subsidiary, Delphi, is "unlikely to emerge from bankruptcy in the near-term without government support and possibly may not emerge at all." If that were to happen, GM said it may have to acquire some of Delphi's plants in order to ensure supply of critical parts or else it may be forced to pay higher prices to another supplier. Its shares closed down 15.5 percent at 1.86 dollars.

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