GM warns it may be forced into bankruptcy

[LahoreEstate]

DETROIT: General Motors Corp on Thursday said its auditors had raised ‘substantial doubt’ about its ability to survive outside bankruptcy if it fails to stem its losses and stop burning cash.

The ‘going concern’ warning from the struggling US automaker had been expected, but underscored the stakes for GM as it seeks up to $30 billion in US government aid to restructure outside a court-supervised bankruptcy process. GM’s shares dropped 15 percent to $1.87 in early trading on the New York Stock Exchange as investors reacted to the news.

GM said its creditors had agreed to waive a requirement that could have allowed them to force the automaker to repay more than $6 billion in loans because of the warning in order to allow GM to press its case for government aid.

The automaker had warned late last month that it expected auditors Deloitte & Touche would question its viability after it reported a loss of nearly $31 billion for 2008.

The disclosures came in GM’s delayed annual report to US Securities Regulators and a 25-page discussion of the growing risks facing the automaker ranging from tight credit and troubled suppliers to slumping demand for new cars around the globe. reuters

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