Delphi asks for approval on claim settlement agreement with Wachovia, Lextron

By Reshmi Basu

New York, June 29 - Delphi Corp. requested approval of a settlement agreement with Wachovia Bank NA and Lextron Corp, which would eliminate nearly $7 million of claims against the company, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Mississippi-based supplier Lextron said it suffered financial difficulties when it was wrongfully terminated by Delphi and Delphi Automotive Systems, LLC. On July 14, 2006, Lextron filed claims against Delphi in the amount of $800,000 plus incidental and punitive damages with the U.S. District Court for the Southern District of Mississippi.

Wachovia has the rights to the Lextron claims, according to the filing.

In addition, on July 31, 2006, Wachovia filed claims against Delphi and Delphi Automotive Systems, each for the amount of $6.66 million to recover compensatory damages, attorneys' fees and punitive damages with the Circuit Court in Mississippi.

Delphi said that after "extensive arms-length negotiation", the parties were able to reach an agreement, which would resolve all the disputes between the parties including the dismissal of more than $7 million in claims.

Under the proposed agreement:

• There will be a $500,000 claim allowed against Delphi Automotive Systems LLC in full settlement;

• The Lextron claim totaling at least $800,000 will be withdrawn;

• There will be a reduction of the Wachovia claim by $6.16 million as well as the elimination of a second duplicate claim; and

• Both the federal and state court actions in Mississippi will be withdrawn.

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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