Delphi committee says plan changes leave 'effectively nothing' for unsecured creditors

By Caroline Salls

Pittsburgh, June 9 - Delphi Corp.'s official committee of unsecured creditors objected to the proposed changes to the company's plan of reorganization, arguing that unsecured creditors stand to receive nothing under the revised plan, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said the company is selling its domestic business to General Motors "at a fire sale price" at the insistence of the U.S. Treasury to ensure that GM's supply from Delphi continues, not to maximize the value of the Delphi's estates.

"And [the] Treasury is forcing a sale of the rest of the business to a private equity fund for one dollar while making sure creditors get nothing," the committee said in the filing.

The committee said the proposed plan changes were negotiated with GM and the Treasury "with a grand total of about 10 minutes of input from the committee."

According to the objection, Delphi's previously confirmed plan of reorganization had provided for a "par plus accrued" recovery for general unsecured creditors at an agreed-upon total enterprise value. However, the committee said general unsecured creditors will receive "effectively nothing" under the revised plan.

Specifically, the committee said asset purchaser Parnassus must actually generate and distribute more than $7.2 billion in actual cash returns to its equity and GM must receive payment in full of its loan to Delphi, plus an unknown return on that amount, "before the unsecured creditors receive even a penny."

"It is clear that the unsecured creditors will never receive a single distribution," the committee said in the objection.

A hearing is scheduled for June 10.

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

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