Delphi, unsecured creditors committee object to costly equity committee appointment

By Caroline Salls

Pittsburgh, March 2 - Delphi Corp. and its official committee of unsecured creditors objected to Appaloosa Management, LP's request for appointment of an official equity committee for Delphi's Chapter 11 case, according to Thursday filings with the U.S. Bankruptcy Court for the Southern District of New York.

Delphi said the only evidence that Appaloosa has identified so far - which it has refused to produce - is a reference to a preliminary recovery analysis by Ronald Goldstein of Appaloosa, which Appaloosa said was conducted during the three months before Delphi filed for bankruptcy.

According to the objection, Appaloosa said this preliminary analysis somehow demonstrated that Delphi has substantial equity value, based in part on Appaloosa's proprietary forecasts of EBITDA and the restructuring of unidentified employee benefit-related obligations.

However, Delphi said this analysis is irrelevant to the question of whether there is sufficient equity in the estate to justify the costs of an equity committee now.

The company also said Appaloosa acknowledges that it has given no thought to the question of the cost of appointing an equity committee and Appaloosa cannot prove that an equity committee is necessary to adequately represent the interests of equityholders.

The committee agreed with the company in its objection, saying the interests of equityholders are adequately represented and Appaloosa has not proven that there will be enough equity value for a distribution to holders under a plan of reorganization.

"Appaloosa is highly sophisticated and capable of representing its own interests without burdening [Delphi's] estates with the substantial additional administrative costs that would be incurred were an equity committee to be appointed," the committee said in its objection.

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

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