Delphi Creditor Seeks Approval to Investigate GM

In court papers filed Friday, an organized group of unsecured creditors in Delphi’s Chapter 11 case wants the U.S. Bankruptcy Court to allow it to investigate potential claims GM may have, as a result of the automaker’s 1999 parts unit spin-off.
The committee wants to look into any claims GM has against Delphi as well as Delphi’s claims against its former parent.
GM has estimated its financial exposure to Delphi as somewhere between $5.5 billion and $12 billion.
While debtor reorganization is still the obvious end-goal, these claims, along with labour negotiations and current business relationships remain critical.
Under the terms of the spin-off, GM has an indemnity clause stating that money it spends on benefits for Delphi workers would give GM a general, unsecured claim on Delphi assets in bankruptcy.
Last week, GM, Delphi and the United Auto Workers announced the outlines of an early retirement deal that could greatly reduce the number of U.S. hourly employees working for the two companies.
The creditors said GM has refused to provide it with documents related to the spin-off and labour negotiations and that Delphi’s cost structure, which was inherited by GM, was the principal reason for its bankruptcy filing.
For their part, the committee of Delphi creditors insists that it is General Motors itself, in its capacity as the parent company, which is largely responsible for this crisis.
Bankruptcy Judge Robert D. Drain set a hearing on the committee’s request for April 7 with objections due April 4.