Wednesday, 27 May 2009

GM - the axeman approaches

The GM balance sheet is one of the wonders of the modern world. Apparently, its liabilities have dwarfed its assets for years. Yet it still kept trading. Somehow, it regularly managed to convince its creditors to part with cash, which it used to pay off its running costs, despite the fact that its dreadful balance sheet was a matter of public record. Any fool could download it from the internet and understand that the company was overloaded with debt.

However, that trick couldn't continue once the credit crunch began. The survival of GM came down to one simple question; how much cash did the company have?

A few months ago, it managed to pull out a few billion from the US government, but the new Obama administration gave the company a deadline. If the company doesn't sort itself out by Monday, then it will be forced into bankruptcy.


roym said...

weren't they at one point virtually a finance company with a car production sideline?
what a sorry sorry mess. never mind, those responsible will still have a nice pension and 2nd/3rd homes to retire to

ntk said...

Why was GM allowed to keep trading when it was clearly insolvent?

The NYT is insolvent too.

Why are these bankrupt companies in the US allowed to keep trading? Is trading while insolvent not illegal there?