Delphi debtor looks to fund $163 million Spanish plant closure severance plan

By Caroline Salls

Pittsburgh, July 10 - Delphi Corp. debtor Delphi Automotive Systems (Holding) Inc. requested court approval to provide $163 million to wholly owned subsidiary Delphi Automotive Systems Espana SA to fund severance payments in connection with a plant closure, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, under its Spanish "concurso" insolvency proceeding, Delphi Automotive Systems Espana agreed to make a separation payment of 45 days' salary to workers at its former Cadiz, Spain, plant.

In exchange for Delphi Automotive Systems (Holding) providing the funding, the Spanish subsidiary's receivers have agreed that, upon approval of the collective layoff procedure by the Spanish court, creditor approval of Delphi Automotive Systems Espana's plan of reorganization, payment of at least 66 2/3% of creditors' pre-concurso claims within three years and payment in of full of post-concurso claims, Delphi Automotive Systems (Holding), Delphi, all other Delphi affiliates and each of their directors and officers will be released from any liability related to Delphi Automotive Systems Espana and its concurso proceedings.

Delphi said that the Spanish subsidiary believes that if it does not accept the terms of the separation plan, the Spanish court may dismiss the layoff plan, and its creditors may claim that Delphi Automotive Systems Espana's directors, as well as Delphi Automotive Systems (Holding) and/or Delphi under a "shadow director" theory, could be exposed to potential litigation.

A hearing is scheduled for July 19.

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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