Former GM division and parts maker Delphi has been bankrupt for over three years. During that time, three main factions have emerged: GM (who wants to draw a line under its Delphi-related losses yet keep parts flowing at a low price), creditors (who want to make sure they get their god damn money back in the face of an increasingly inevitable Chapter 7 liquidation) and the lawyers (banking hundreds of millions of dollars from both sides). Matters are coming to a head, as all three groups face a September 30 deadline for agreement. GM wants to trade $3.4b worth of pension guarantees for, get this, $2b from Delphi’s coffers. AND The General wants a legal guarantee that Delphi can’t make any more calls on GM’s cash. Ever. Delphi’s creditors are, of course, livid. As The Detroit Free Press reports “The unsecured creditors committee says those measures make the deal untenable by eating into their payout. Often in bankruptcy cases, unsecured creditors see only a fraction of what they’re owed after a company files for bankruptcy.” Not said: the creditors would get sweet FA in C7. “The creditors committee today plans to ask U.S. Bankruptcy Judge Robert Drain to allow it to sue GM on behalf of Delphi, saying the supplier didn’t do enough to turn around unprofitable contracts with the automaker.” In other words, never mind all that other stuff for a second; GM’s been paying too little for its Delphi parts. The lawyers? Happy, happy, happy!
8 Comments on “GM Tries to Grab $2b from Delphi...”
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Well, when (not if) this heap of dung goes Chapter 7, what will GM, Toyota, and other companies which have relied upon it for part, do then?
I suppose for GM it might actually be a bit of a break, in a sense, since they might be able to have an excuse to shut down totally unprofitable North American operations for awhile until they can retool Chinese suppliers for the necessary parts. On the other hand, given GM’s own monetary situation, this may well be the straw that breaks the Camel’s back.
Toyota and other companies supplied by Delphi will also be hurt, of course, but there’s an obvious difference between a fleshwound and a mortal wound. Well, obvious to most. (”‘Tis but a fleshwound. Come back and fight!” – GM)
Things like this being dragged on for so long by the lawyers who are banking millions, does anyone think they don’t really have any incentive to solve the problem. I remember once reading that that you could tell how long the OJ Simpson trial was going to be by dividing Simpson net worth by the lawyers daily fee. Seems like a similarity.
If the deadline really is (was?) September 20, then I must be missing something.
inept123:
My bad. September 30. Text amended.
Judge Drain? Really? As in, Judge Drain declared Delphi has gone down the drain?
Huh. Like, well, he’d would know, eh.
What a perfect name for a bankruptcy judge.
Hmmm. Early October could be interesting with the Delphi deadline and the GM short ban expiring…
“…have an excuse to shut down totally unprofitable North American operations for awhile until they can retool Chinese suppliers for the necessary parts.”
Well, won’t THAT help the American economy. Send more money and jobs overseas with no offsetting sale of US goods/services to foreign markets.
It would have been better if you had used this picture rather than the picture of the theater at Delphi you used.