Delphi asks U.S. Trustee to disband equity committee in light of enterprise value decline

By Caroline Salls

Pittsburgh, April 14 - Delphi Corp. is asking the U.S. Trustee to disband or suspend the activities of the official committee of holders of the company's equity securities, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, the circumstances that existed in March 2006 when the equity committee was originally appointed have changed dramatically.

"Because equity security holders will almost certainly receive no distributions in these Chapter 11 cases, the costs to the debtors' estates of continuing to maintain the equity committee can no longer be justified," Delphi said in the motion.

Specifically, the company said its total enterprise value has fallen to $7.2 billion under a reaffirmed business plan for 2008 to 2011 from the $12.5 billion value associated with Delphi's confirmed plan of reorganization.

Because of the reduced valuation, Delphi said the proposed distributions to creditors and equityholders under its amended plan filed on Oct. 3 are significantly less than under the confirmed plan.

In addition, the company said it is negotiating with their stakeholders to formulate further plan modifications and, as a result, is making more changes to its business plan that are consistent with the recent North American vehicle production volume declines, the global slowdown in vehicle sales, and the ongoing economic recession.

Although no formal revised business plan has been completed, the company said it expects the total business enterprise value to be further reduced, possibly to an amount equal to or even less than its post-bankruptcy debt obligations.

A hearing is scheduled for April 23.

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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