Bankruptcy

GM Boosts Its Delphi Loans by $300m

The former owner of the auto-parts maker now has extended $950m as Delphi seeks to emerge from bankruptcy.
Stephen TaubAugust 11, 2008

General Motors agreed to increase by $300 million the amount it will lend Delphi Corp., its former auto-parts unit, which desperately is trying to emerge from bankruptcy.

The additional $300 million of advances — bringing the total that GM plans to extend to $950 million — is conditioned on Delphi filing modifications to its reorganization plan by October 31, according to an announcement from Delphi. Delphi said in court papers that it needs the additional money to maintain a minimum level of liquidity, according to Reuters. A hearing in Bankruptcy Court is scheduled for August 26.

Last month a U.S. bankruptcy judge allowed Delphi to move forward with a lawsuit that seeks to force hedge fund Appaloosa Management LP to complete its deal to invest in the bankrupt auto parts maker. Judge Robert Drain refused a request by Appaloosa and other investors to dismiss the case, according to the Associated Press.

The suit alleges fraud and breach of contract when the hedge funds tried to walk away from their commitment to participate in a $2.55 billion equity deal. Appaloosa, Harbinger Capital Partners Master Fund I Ltd., and Pardus Capital Management LP each created investment vehicles to participate in the deal.