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.
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.
Reuters 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.