Delphi committee members may participate in exit financing, court says

By Rebecca Melvin

New York, Jan. 14 - Delphi Corp.'s statutory committee members are permitted to participate in exit financing syndication that would enable the automotive electronics manufacturer to emerge from bankruptcy, according to an order of judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York.

Under the order, committee members must make written disclosure to Delphi, counsel to each of the committees, and the U.S. Trustee in advance of participation.

Also, they must be screened on an ongoing basis from any information relating to Delphi's or the committees' strategy on exit financing.

Furthermore, they can't discuss or share information with his or her institution or any lender involved in exit financing, nor can they negotiate directly with Delphi or the committees on exit financing.

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

Delphi's U.S. Trustee objected to Delphi's motion to permit committee members' participation in exit financing syndication. She argued that committee members must first resign from committees to participate in syndication to prevent a possible conflict of interest.

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05-60200.

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