Court OK clears way for Delphi to emerge from bankruptcy
Auto parts giant Delphi Corp.'s bankruptcy reorganization plan won court approval Thursday, clearing the way for the company to emerge from bankruptcy protection after almost four years.
U.S. Bankruptcy Judge Robert Drain approved Delphi’s plan to hand over most of its assets to its bankruptcy lenders and General Motors Co., its former parent and biggest customer.
Delphi, based in Troy, Mich., said it planned to emerge from bankruptcy protection by Aug. 31. Under the creditors’ plan, approved Monday by Delphi’s board of directors, the lenders will forgive more than $3 billion in loans to the company.
GM, which said it supported the creditors’ bid, is expected to take over several Delphi plants that supply parts to the largest U.S. automaker.
Delphi, which has been operating under bankruptcy protection since October 2005, has said the lenders’ offer was similar to the bid submitted by Beverly Hills investment firm Platinum Equity.
Platinum Equity, whose bid had the backing of Delphi, GM and the federal government’s auto task force, at one point appeared to be the front-runner to acquire Delphi.
But the creditors complained bitterly during a court hearing last month that Platinum Equity was getting a sweetheart deal that would enrich it while paying Delphi’s bankruptcy lenders no more than 20 cents on the dollar.
Drain then ordered a formal auction for Delphi, during which the lenders submitted what turned out to be the successful bid.
“We are excited about the opportunities afforded by a strong partnership between Delphi” and the creditor group, Elliott Management, one of the leading lenders, said in a statement. “Delphi has executed a dramatic transformation of its business during the restructuring process and will emerge as a vibrant, independent enterprise with a well-capitalized balance sheet and a strong position for long-term success.”
In a statement, Platinum Equity said, “We are excited to continue exploring ways to contribute to Delphi’s long-term health and profitability.”
GM and Delphi’s lenders will pay Platinum Equity $30.5 million to cover expenses associated with its bid.