Delphi reportedly wants to pay some suppliers millions of dollars it owes in pre-bankruptcy bills – provided they agree to extend expiring contracts and forgo price increases or stricter payment terms.
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According to Reuters, citing papers filed with the court late last week, Delphi, which in October filed the biggest bankruptcy in US automotive history, plans to ask a bankruptcy judge to approve its plan at a regular hearing on 29 November in New York.
The report said more than 11,000 agreements with sole-source components suppliers expire by the end of 2005, and Delphi wants to entice suppliers into extending about 8,000 of the contracts by paying up to 75% of pre-bankruptcy claims in instalments.
According to Reuters, the company said that, in many cases, it relies on daily shipments of components, and a failure to maintain supplies could have a devastating impact on its production and ultimately on its automaker customers.
Delphi reportedly would pay suppliers in six quarterly instalments for the pre-bankruptcy liabilities it agrees to cover and the rest would be considered general unsecured claims. It expects an average quarterly payment in 2006 of about US$50 million.
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By GlobalDataReuters said Delphi estimates that it owes about $1 billion in payments from before its US units filed for bankruptcy on 8 October. About $587 million of those payments are covered under contracts included in the proposal.
