Delphi emerges from bankruptcy

[rickaren]

Delphi emerges from bankruptcy smaller, healthier

Posted Wednesday, Oct 7, 2009, 2:18 pm in Employee News

Delphi’s long and painful stay in bankruptcy court ended Tuesday after many false starts and four years of court-supervised restructuring, The Detroit News reported.

The new, privately held Delphi Holdings LLP gets a fresh start as a smaller auto parts supplier—shedding unprofitable businesses—with less debt and lower labor costs, the paper aid.

The closing, completed at a law office in New York late Tuesday, was a complex series of transactions involving the transfer of assets around the world, the News noted. The stage was set July 30, when a bankruptcy judge approved the sale of the bulk of the company to its lenders and a chunk to General Motors, the paper said.

Delphi’s October 2005 bankruptcy was prompted when the company said it needed to reduce its hourly labor costs by more than 60 percent, the story said. Delphi posted a $603 million net loss in the quarter ending June 30, bringing its operating losses since 2005 to about $10 billion, the paper reported.

GM, which spun off Delphi in 1999, is providing financing and buying back Delphi’s global steering business and four U.S. plants as part of the deal. In total, GM set aside $12.5 billion to cover the wind-down costs.

The acquisition of the old Delphi’s core assets was led by its chief lenders, Elliott Management and Silver Point Capital, which swapped much of what they were owed for Delphi’s assets, the News reported. They beat out a bid from Platinum Equity, the story said.

The News said the auto supplier will be a shell of its former self, after closing 21 of its 29 U.S. factories. Delphi said earlier it planned to have about 12,700 workers and four plants in the United States by the end of this year, the paper said. That compares with 37 U.S. factories and about 80,000 U.S. employees in 1999, when it was spun off by GM, the story said. (The Detroit News)