From Automotive News / MEMA Industry News
TROY, MI — Delphi Corp. filed its plan of reorganization with U.S. Bankruptcy Court in New York, clearing one the last major hurdles the company faces as it attempts to exit Chapter 11 bankruptcy.
If the plan is approved by creditors and a U.S. Bankruptcy Court judge, Delphi would be in position to emerge from bankruptcy.
In a statement issued, Delphi also said it reached a settlement and restructuring agreements with General Motors, its former parent company, on a number of issues.
Troy, MI-based Delphi, which filed for bankruptcy protection in October 2005, said its comprehensive settlement with GM resolves: litigation initiated in March 2006 by Delphi to terminate some supply agreements with GM; all potential claims and disputes with GM arising from the separation of Delphi from GM in 1999; post-separation claims and disputes between Delphi and GM; claims filed by GM against Delphi in Delphi’s bankruptcy case; GM’s treatment under Delphi’s proposed plan of reorganization; and various other legacy issues.
The reorganization plan is based on the $2.55 billion equity investment proposal led by Appaloosa Management LP and defines expected creditor recoveries, including offering current shareholders the right to buy stock in the reorganized company. The plan requires approval of Delphi’s creditors and the investor group led by Appaloosa. The U.S. Bankruptcy Court also must approve a disclosure statement intended to explain the plan in plain language before Delphi can solicit its approval. Delphi also said it wants to obtain commitments for about $7 billion of exit financing by early in the fourth quarter and believes the reorganized company will be attractive to investors.
Delphi has recently announced plans to slash thousands of U.S. hourly workers and up to 8,500 salaried workers worldwide. The company is also exiting several business lines. The company negotiated new contracts with a half-dozen unions in the United States for the reorganization. It plans to retain eight union plants in the U.S. and expects to close or sell 25 North American sites overall.
The company also said it remains committed to divesting the steering, bearings and interiors businesses by the end of 2008.