Delphi Bondholders Sue GM To Stop $300m Loan

Robert Farago
by Robert Farago
delphi bondholders sue gm to stop 300m loan

Why would Delphi's bondholders sue GM in Manhattan court to prevent a $300m cash infusion? Because Highland Capital Management and other bondholders fear GM's "undue" influence over the bankrupt parts supplier. [NB: the $300m is on top of an existing $650m loan.] In other words, GM's money could give it the leverage it needs to prevent its former division from selling off profitable bits of Delphi. Like, say, the parts of Delphi that supply the GM corporate mothership with parts. GM control would also mean that the artist formerly known as the world's largest automaker could forestall a Delphi Chapter 7, should the bondholders decided that the jig is up. "It is merely a band-aid (albeit an enormously expensive and porous band-aid),'' the bondholders told Bloomberg. "It is a truism that borrowing to fund losses is a loser's bet.'' You want to talk about cash burn? "Highland and other bondholders said in the objection to the additional financing that Delphi used more than $960 million in net cash to fund operating activities in just the first six months of 2008." Anyway, bankruptcy judge Robert Drain approved a $5m company payout for the legal costs of defending former Delphi officers and employees from lawsuits related to pension funds and the bankruptcy.

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  • Robert Farago Robert Farago on Aug 21, 2008

    ZoomZoom : Right you are. Text amended.

  • on Aug 22, 2008
    Anyway, bankruptcy judge Robert Drain approved a $5m company payout for the legal costs of defending former Delphi officers and employees from lawsuits related to pension funds and the bankruptcy. Well, isn't that nice of him. Is it any wonder that the people of this country are becoming more cynical and disillusioned with the powers that be.

  • Monkeyboy Monkeyboy on Aug 22, 2008

    Business as usual when an EX-lawyer protects another lawyer with respect to getting paid. Judges are EX-lawyers. Kind of like a good ol boys retirement fund...

  • Becurb Becurb on Aug 22, 2008
    Anyway, bankruptcy judge Robert Drain approved a $5m company payout Drain - what an apt name for a bankruptcy judge! Bruce

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