Today’s GM filings, besides marking the biggest failure of an industrial company in U.S. history, it also revealed the depth of problems the automaker was facing.
From The WSJ: General Motors Corp.’s $82.2 billion in assets and $172 billion in liabilities spell out the extent of its problems and sheer breadth of the 101-year-old giant’s bankruptcy.
In a torrent of filings at the U.S. Bankruptcy Court in Manhattan, GM’s mind-numbing scale is evident: It has 463 subsidiaries and has built 450 million cars and trucks over the years. It employs 235,000 people worldwide. This includes 91,000 in the United States, which it pays $476 million each month, and 493,000 retirees with various benefits. It spends $50 billion a year buying parts and services from 11,500 vendors in North America.
The filings indicate GM management knew a year ago that the company was running low on time and money. But even then, fund-raising efforts could not have produced enough to keep the auto maker afloat.
Chief Executive Frederick “Fritz” Henderson said in an affidavit that the auto maker, starting around June 2008, explored raising as much as $3 billion through a public stock or bond offering.
Mr. Henderson said no one except the federal government expressed interest in lending to the auto maker or purchasing its assets at a price that would have kept the company operating.
It isn’t surpising why GM couldn’t raise any money through stock or bond offering. Over the past 2-3 years the co. has acknowledged losing tens of billions of dollars while facing additional cash consumption. In addtion, GM’s drop in sales was 48.8%, nearly 10% higher compared to a 38.4% for the industry.