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Delphi U.S. Trustee objects to equity commitment, plan framework agreement fee payment process
By Caroline Salls
Pittsburgh, Jan. 3 - Delphi Corp.'s motion for approval of its equity purchase and commitment agreement and plan framework support agreement drew objection from the company's U.S. Trustee, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
According to the objection, millions of dollars in fees and expenses must be paid by Delphi under the agreements.
The U.S. Trustee said the fees and expenses will be paid as administrative claims, and the fees will be paid with no oversight of the company's statutory committees, fee committee, the U.S. Trustee or the bankruptcy court.
As a result, the U.S. Trustee asked the court to require the professionals to be paid under the agreements to file applications for payment before any fees or expenses are disbursed.
In addition, the U.S. Trustee said the framework agreement appears to be a "sub rosa" plan of reorganization that circumvents the disclosure statement and plan confirmation process required under bankruptcy law.
"The framework agreement is no more than a term sheet for a plan that has yet to be filed," U.S. Trustee Diana G. Adams said in the objection.
"It should only be considered in the context of continued plan negotiations."
Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.
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