Delphi Sues Investors for Bailing on C11 Rescue Plan

Robert Farago
by Robert Farago
delphi sues investors for bailing on c11 rescue plan

Can a guy get weekend off? Jeez. You put your proverbial pen down for five minutes and the next thing you know Automotive News is tossing the alerts at you like a Vegas knife thrower. Most of the time, it's GM trying to sneak in some bad news (e.g. Rick Wagoner's $14.4m pay packet) while non-OCD reporters and stock market traders pursue what's euphemistically called "a life." OK, so, first up: auto supplier Delphi have sued investors Appaloosa [AN, sub] and eight co-conspirators for walking away from a bankruptcy exit plan for the troubled (and how) former GM division. "Delphi is alleging a breach of contract and fraud, and is asking the court to provide up to $2.55 billion in equity funding and to pay compensatory and punitive damages in an amount to be determined at trial." (Of course, that's just bad writing; the court doesn't have $2,55b. But you get the idea.) Any such court case would ehance Delphi's United Auto Workers' ire and feed TTAC's grist mill; like this little gem from Delphi Veep David Sherbin. "The plan investors vigorously pursued a prominent role in our restructuring, received over $60 million in fees for their commitments." Wow! Add in the lawyers fees– which could easily eclipse that amount– and there's no question Delphi's ignoring the wise British maxim "When you're in a hole, the first thing you do is stop digging." In any case, once again, it looks like a GM – Delphi bailout could well be the cash burn that finally sets The General's hair on fire, helping secure their seat next to Delphi in federal bankruptcy court. Next up: the UAW "settlement" at American Axle…

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  • Jolo Jolo on May 18, 2008

    $12 million a month for bankruptcy lawyer fees is what Delphi pays. That is why they wanted to be done by the end of 2007, then the 1st quarter of 2008 and finally by the end of April 2008, which they were. Appaloosa didn't like GM's potential influence on Delphi due to the amount they were kicking in and used it as an excuse to bail, all the while telling Delphi they owed them ~$82 million. What will happen is that they will drop all claims against each other and it will be over. GM won't let Delphi go chapter 7 because it would take GM too long to second source all of Delphi's parts that they have in almost all their vehicles. GM would have no choice but to go Chapter 7 if that happens.

  • AMXtirpated AMXtirpated on May 19, 2008

    Highland Capital could not be reached for comment, given they were laughing too hard.