Sunday, April 09, 2006

GM agrees to provide Delphi creditors with information

Saturday, April 08, 2006

GM agrees to provide Delphi creditors with information (storylink)

Paullette Chu / AP Business Writer

NEW YORK -- General Motors Corp. has agreed to cooperate with unsecured creditors of Delphi Corp. that are looking to challenge GM if the automaker attempts to seize big payouts from a restructured Delphi, attorneys in the case said Friday.

Delphi's unsecured creditors committee, which includes representatives from companies including Electronic Data Systems Corp. and General Electric Co., wants GM to provide it with various documents so that creditors can examine any claims GM has made or makes on Delphi's assets.

On Friday, attorneys in the case said GM and the unsecured creditors have reached an agreement in which GM will cooperate with the committee so long as the parties can agree to the scope and other terms of the creditors' inquiry.

The parties plan to file their agreement with the U.S. Bankruptcy Court in Manhattan, and Judge Robert Drain indicated he would approve it.

Delphi has listed GM, its former parent company, as one of its largest unsecured creditors, along with the International Union of Electrical Workers-Communications Workers of America and Pension Benefit Guaranty Corp.

Under an agreement with Delphi and its unions, GM has agreed to fund buyouts for 17,000 Delphi hourly workers and allow an additional 5,000 Delphi workers to flow back to GM. Creditors have raised concerns that the buyout deal would allow GM to file a claim against Delphi for some of the costs of the buyout.

As it is written, the program "would create an outsized, unnecessary and unjustifiable claim for GM" against Delphi, the creditors committee said in a court filing this week.

In addition, GM claims that Delphi owes it roughly $1.23 billion for costs related to post-employment benefits for employees who worked at Delphi and retire from GM, in addition to other amounts for warranty or product recall claims and overpricing claims.

Delphi's unsecured creditors committee, however, has questioned whether GM qualifies as an unsecured creditor at all because of the two companies' intertwined relationship. Delphi has largely blamed its financial struggles on an overly burdensome and costly labor cost structure that it inherited from GM in its spin-off from the automaker back in 1999.

Hedge-fund manager David Tepper and his Appaloosa Management LP, who bought most of his roughly 9 percent stake in Delphi right after the company filed for bankruptcy protection last October, has joined the unsecured creditors' committee in its potential challenge against GM.

Shares of GM slipped 4 cents to close at $19.51 on the New York Stock Exchange.


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