Delphi U.S. Trustee argues committee members must resign to participate in exit financing

By Caroline Salls

Pittsburgh, Jan. 9 - Delphi Corp.'s U.S. Trustee objected to a request to allow members of two of the company's committees to participate in syndication of its exit financing, arguing that any committee member who wants to participate in the exit financing must first resign from the committees, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Delphi's two statutory committees are its official committee of unsecured creditors and official committee of equity security holders.

U.S. Trustee Diana G. Adams said participation in the exit financing would interfere with a committee member's fiduciary duties to the committee's constituents, possibly causing a conflict of interest.

In addition, Adams said the motion is an attempt to prevent her from removing any committee member who participates in the exit financing.

The U.S. Trustee said she has no problem with any committee member participating in the exit financing, as long as that person resigns from the committee.

"Resignation is the only way to maintain the transparency, appearance of fairness and integrity of these cases and the bankruptcy system," Adams said in the objection.

A hearing is scheduled for Thursday.

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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