On July 30, 2009, Bankruptcy Judge Robert D. Drain approved a modified plan for Delphi Corporation that should end the troubled auto supplier’s tumultuous, four-year odyssey through Chapter 11. The modified plan was the result of a two-day court-ordered auction process in which the credit bid of Delphi’s debtor-in-possession lenders beat out a rival bid. Under the terms of the modified plan, the DIP Lenders will forgive approximately $3.44 billion of what they are owed in exchange for taking over the bulk of Delphi’s assets and operations. In addition, Motors Liquidation Company (f/k/a General Motors Company) will take over four of Delphi’s North American factories along with its steering business.
The Proposed Sale
On June 1, 2009, Delphi announced that it planned to move forward with a sale of substantially all its assets to Platinum Equity, under either a modified reorganization plan or Section 363 of the Bankruptcy Code. The sale was the result of negotiations among Delphi, Platinum, GM and the federal government’s auto task force. Delphi is the sole-source provider for many components of GM vehicles and thus, Delphi’s continued existence is critical to GM’s viability. Under the terms of the proposed sale, Platinum would pay $250 million in cash and a $250 million credit line to Delphi in exchange for most of Delphi’s assets. Platinum also would operate Delphi’s U.S. and offshore businesses with emergence capital and capital commitments of approximately $3.6 billion. GM, which would have provided the bulk of the financing for the deal, would acquire four of Delphi’s North American sites as well as its global steering business.
