Delphi has been ordered to open up the sale of its assets to other potential bidders who could compete with an offer from private equity firm Platinum Equity.
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New York bankruptcy court judge Robert Drain said the supplier should provide information to other potential bidders, subject to confidentiality agreements, and suggested the company set up a sales process for an auction of its assets in July, Reuters reported.
Delphi last week said it had agreed to sell most of its global operations to Platinum Equity, allowing it to emerge from nearly four years of bankruptcy.
But several lenders that provided bankruptcy funding to Delphi said in court they wanted to make their own competing offer for Delphi’s assets.
The lenders, which provided senior debtor-in-possession financing to Delphi, said they would like access to information about agreements between Platinum and GM so they could decide whether to submit their own “credit bid” for Delphi, Reuters said.
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By GlobalDataDelphi lawyer John Butler countered claims that Delphi had not been transparent about the sale, saying the lenders could have made this offer at any earlier date and specifically told Delphi it should plan to go forward without any additional capital from them.
“Despite all of the access the DIP lenders have had to information in the last six months … the only feasible, fully funded transaction we have to move forward with is the one before us,” Butler told the court, noting that the company had been working for 14 months to come up with such a transaction to resolve its bankruptcy process.
Drain said he was concerned about provisions in Delphi’s deal with Platinum that could prevent Delphi from working with other parties that want to make competing offers.
He also said litigation could arise from preventing other bidders’ offers and he was not sure why Platinum should get these special protections.
He thought a more open sale process would make all parties more comfortable with the outcome.
The judge also gave Delphi preliminary approval to access US$250m in funding from GM that is expected to support Delphi until it can emerge from bankruptcy, the report added.
