The Wall Street Journal-20080116-Delphi Bondholders Object to Bankruptcy Plan
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Delphi Bondholders Object to Bankruptcy Plan
Delphi Corp. bondholders who are owed more than $2 billion say the auto-parts company hasn't yet made the case that it can survive outside of bankruptcy because it doesn't have financing to pay for its exit.
The senior noteholders said in court papers filed with the U.S. Bankruptcy Court in Manhattan that the court cannot approve Delphi's bankruptcy-exit plan without the financing package in place. Delphi is seeking $6.1 billion in loans but hasn't yet obtained the financing. The bankruptcy court is set to consider Delphi's bankruptcy plan at a hearing tomorrow.
Without a "firm financing commitment," the bondholders said, Delphi's ability to consummate its bankruptcy-reorganization plan is "speculative at best."
Delphi, based in Troy, Mich., has struggled to line up exit financing due to credit-market turmoil, forcing the company to make the unusual move of turning to members of its creditor and shareholder committees to help provide funding.
Delphi spokesman Lindsey Williams said yesterday that the auto-parts supplier hasn't secured financing commitments yet. Meetings with potential lenders were launched last week. Mr. Williams couldn't provide an exact date for when the funding would be in place. Mr. Williams declined to comment on the bondholders' objection.
The bondholders say Delphi must show at the confirmation hearing that it has a firm financing commitment from lenders.
