Delphi equity committee disbanded due to lack of recovery prospects

By Rebecca Melvin

New York, April 23 - Delphi Corp.'s official committee of holders of the company's equity securities was disbanded by the U.S. Bankruptcy Court for the Southern District of New York on Thursday.

Judge Robert Drain approved the company's motion premised on "the undisputed fact that looking to the debtors' own assets there appears to be no reasonable prospect of a recovery by prepetition shareholders, consequently continued service of an official committee is no longer warranted."

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

As previously reported, the company's 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, according to a company filing.

In addition, the company said it expects further modifications to the plan filed Oct. 3 related to continued negotiations with stakeholders that would result in further downward revision of enterprise value, given recent North American vehicle production volume declines, the global slowdown in vehicle sales and the ongoing economic recession.

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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