Delphi faces a deadline tomorrow (17 April) to deliver a term sheet outlining the future of its continued support from General Motors, which spun it off 10 years ago ago but still has ties to the company.
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According to a New York Times source, if Delphi fails to reach agreements with GM, for which it is one of the largest suppliers, the US treasury department and its lenders by 24 April, it could lose its bankruptcy financing, possibly resulting a liquidation, something the Obama administration’s task force is preparing for.
The government reportedly hopes that a slimmed-down GM, created through a structured bankruptcy, would acquire the Delphi plants and equipment necessary to make the parts it needs while the rest likely would be sold off at ‘fire sale’ prices, leading to little return for creditors.
Talks have continued among Delphi and its lenders, GM and the auto task force, and meetings were scheduled for today and Friday. But little consensus has emerged, the newspaper’s sources said.
The New York Times noted that Delphi has reported a net operating loss every year since it was spun off and, since filing for bankruptcy, has been kept alive largely through US$11bn in support from GM.
”Our focus remains on change, and we continue to focus our efforts on restructuring within our Chapter 11 case,” Delphi spokesman Lindsey Williams told the paper.
