GM played an active role in Delphi’s decision to enter bankruptcy proceedings, according to Dow Jones.
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It cites court papers filed this week in which Delphi’s chief restructuring officer, John Sheehan, testified that the company’s creditors need to bear some of its reorganisation costs, and not just GM.
Dow Jones quoted Wilmington Trust as saying that: “One of the most significant factors that led to the reorganisation was a position by General Motors that it was not going to be the sole…holder of the costs associated with Delphi’s transformation, and it believed that other parties, including the unsecured bondholders, would need to be impaired through the process, and that could really only be achieved at that point in time through a bankruptcy filing.”
A GM spokesperson denied to Dow Jones that GM had any influence on Delphi’s decision to file.
Wilmington Trust has objected to Delphi’s workforce reduction plan, some of the cost of which GM has agreed to pick up. The trust says that it would give GM an advantage over other creditors.
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By GlobalDataAppaloosa Management, one of Delphi’s largest shareholders, has made a similar argument in court papers. It has asked the 7 April hearing on the workforce reduction plan that it be delayed.
GM has, however, warned that a delay could cause the deal to fall apart, according to the news agency.
