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Newbiewar

GM, Creditors Clash of Delphi

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Newbiewar    1

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Paper says unsecured creditors will fight General Motor's efforts to recoup payments to Delphi's workers.

March 24, 2006: 10:31 AM EST

NEW YORK (Reuters) - The committee of Delphi Corp's unsecured creditors plans to challenge the right of General Motors Corp. to claim future reimbursement for money the auto maker pays in benefits to the parts maker's unionized work force, the Wall Street Journal said on Friday.

Delphi, which filed the biggest bankruptcy in U.S. automotive history in October, was spun off from General Motors in 1999.

GM (Research) has estimated it could have to pay Delphi-related employee benefits of between $5.5 billion and $12 billion, the Journal said. Under terms of the spinoff, GM has an indemnity clause stating the expenditures would give it a general unsecured claim on Delphi assets in bankruptcy, the report said.

But Delphi's unsecured creditors' committee and hedge fund manager David Tepper of Appaloosa Management LP -- which owns 9.3 percent of Delphi shares -- plan to challenge the indemnity clause, the Journal said.

"That indemnity clause absolutely needs to be challenged," Tepper's lawyer, Thomas Lauria, told the paper.

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Newbiewar    1

wow... this could get pretty intresting... there is a clause in the delphi spin off, that would give GM certain assets of Delphi should it go bankrupt. in exchange GM would be liable to pay for some of the pensions and healthcare benifits for spun off employees...

I wonder what kind of assets GM is elegable for... :scratchchin:

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