Delphi trade committee decries statement, equity commitment, calls for exclusivity termination

By Caroline Salls

Pittsburgh, Nov. 26 - Delphi Corp.'s committee of trade claim holders objected to the disclosure statement for the plan of reorganization and the amended Appaloosa-led equity investment proposal and called for the court to terminate Delphi's plan-filing exclusivity, according to Monday filings with the U.S. Bankruptcy Court for the Southern District of New York.

According to the disclosure statement objection, the company is "bullheadedly pushing forward with a disclosure statement that supports a plan that cannot be confirmed because of the gerrymandered classification of subordinated debt along with senior debt."

In addition, the trade committee said all of Delphi's creditors oppose the plan, which "fails to disclose the economic reality of the already rejected treatment as the debtors seek to add additional wasted solicitation costs to the $320 million in bankruptcy costs the debtors have already incurred."

The committee said the disclosure statement should not be approved, and the company's exclusivity should be terminated to allow its unsecured creditors committee and other constituents to "promote the plan it should be pursuing."

In the equity commitment objection, the trade committee said that, through the amended investment proposal, the "plan sponsors are high jacking the plan process and pillaging the debtors' coffers to compensate the already well compensated plan investors further."

"The plan will require massive unsecured creditor investment based on a flawed valuation belied by the debtors' own valuation expert," the trade committee said in the objection.

According to the committee, the amended equity commitment agreement violates the absolute priority rule by granting distributions to junior interests, which the trade committee said it believes are the investors' interests, and, "for no justifiable reason, shifts value away from general unsecured creditors to the plan investors."

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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