Delphi noteholders withdraw examiner motion, plan to follow through with GM arrangement objections

By Caroline Salls

Pittsburgh, Sept. 19 - Delphi Corp. senior noteholders CR Intrinsic Investors, LLC and Highland Capital Management, LP have agreed to withdraw their motion for appointment of an examiner in connection with the company's proposed amended funding arrangement with General Motors Corp., according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

However, the noteholders said they still plan to prosecute their objections to the funding arrangement at the hearing scheduled for Tuesday.

As previously reported, Highland and CR Intrinsic filed an objection on Aug. 20 that said Delphi is trying to incur an administrative priority debt to GM to cover losses generated during the period after the company's plan of reorganization failed to take effect.

"The real beneficiary of the GM arrangement, of course, is GM," the noteholders said in the objection.

The noteholders said Delphi is attempting to place the burden of these losses on all of its debtors, even though the "losses are clearly attributable to the North American operations."

CR Intrinsic and Highland Capital said Delphi is harming its creditors, "whose profitable, non-debtor foreign subsidiaries are already subsidizing the money-losing North American operations."

By granting GM an administrative priority claim that could be filed against all of its debtors, the noteholders said Delphi is trying to allow the equity value of its foreign subsidiaries "to be stripped for the benefit of its failing North American subsidiary operations, which may have no equity value at all."

The noteholders said Delphi should be exploring other alternatives to restructure its North American operations, including union negotiations, exiting unprofitable businesses and rejecting unprofitable contracts and negotiating agreements with its customers, including GM, to increase its pricing to rational levels that would allow the North American operations to operate on an economic basis.

In addition, the noteholders said the proposed shifting of assets and debts constitutes a substantive consolidation of the company's estates outside of a plan of reorganization.

On Wednesday, Delphi and its official committee of unsecured creditors objected to the examiner motion. Both the company and the committee argued that the court should not appoint an examiner at this point because a plan of reorganization has already been confirmed for Delphi's bankruptcy case.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.