Delphi's GM agreements, steering option adjourned for Treasury review; exclusivity extended

By Rebecca Melvin

New York, March 24 - Bankruptcy court approval of two amendments to Delphi Corp.'s arrangement with General Motors Corp., plus GM's option to purchase Delphi's steering business were adjourned until April 2, pending review by the U.S. Treasury Department, according to Delphi counsel Tuesday.

Neither the two amendments nor the steering agreement were heard as planned at the U.S. Bankruptcy Court for the Southern District of New York on Tuesday after Treasury informed Delphi that, based on the information, it was not ready to have the matters go forward and would object to the motions if they did move forward, Delphi counsel Jack Butler of Skadden, Arps, Slate, Meagher & Flom told the court.

Treasury wants a more thorough understanding of Delphi and its cash flow needs, Butler said; and he asked for the matters to be set for hearing April 2, which the court granted.

These amendments and the steering business transfer are material transactions under the government's loan agreements with GM, Butler told reporters after the hearing.

"We are pleased that Treasury is engaged in Delphi's situation and working on appropriate resolutions," he added.

Under two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase the amount it is committed to advance to Delphi to $450 million from $300 million.

In addition, Delphi and GM have entered into an agreement under which GM will exercise its option to purchase Delphi's steering business provided under a September 2008 master restructuring agreement.

Of six objections to that motion, two have been resolved, Butler told the court.

Delphi had previously entered into a purchase and sale agreement with an affiliate of Platinum Equity, LLC, but that agreement has been mutually terminated, Delphi said.

Delphi and GM have agreed to attempt to close the steering business sale by April 30 and to achieve other milestones, which are also subject to bankruptcy court approval.

Delphi also said that it is in discussions with its debtor-in-possession lenders' steering committee regarding a consensual amendment to the accommodation agreement that would, among other matters, reset the timing of certain milestones in the agreement in order to facilitate discussions among representatives of Delphi, the DIP Lenders, Delphi's creditors' committee, GM and the U.S. Treasury concerning proposed modifications to Delphi's first amended plan of reorganization.

The company said that completion of the amendment process and approval of the motions should facilitate the company's access to additional liquidity to manage its U.S. operations while providing the company with the liquidity runway to complete discussions with stakeholders and obtain court approval of reorganization plan modifications.

Exclusivity extended

Delphi's requests to extend its exclusive periods to file a plan of reorganization and to solicit votes on the plan were extended to May 31 and July 31, respectively.

The exclusive plan-filing period had been set to expire March 31, and the solicitation period was going to expire May 31.

The extension request only applies to Delphi's statutory committees because its exclusivity in connection with all other parties in interest has already been extended until after Delphi's plan takes effect.

Delphi said its General Motors accommodation agreement requires it to file changes to its plan of reorganization by April 2. The company said it would expect the proposed disclosure statement changes to be approved by May 2.

A hearing for approval of disclosure material relating to the modified reorganization plan was still scheduled April 23.

Delphi was unable to emerge from bankruptcy after its Chapter 11 plan was confirmed by the court in January 2008 because investors led by Appaloosa Management LP backed out of an agreement to provide as much as $2.55 billion.

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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