New York (HedgeCo.Net) – While Delphi continues its quest to secure the capital needed to exit bankruptcy, GM has announced they will increase their loan to the auto parts maker to $950 million. The extra $300 million will help Delphi maintain some liquidity throughout the process.
Delphi, who sought bankruptcy protection in October 2005, pulled together an exit strategy that included a $6.1 billion influx of capital. Hedge fund Appaloosa Management took the reins and agreed to provide $2.55 billion to help lift them out of Chapter 11.
Former parent company GM also came to the rescue and promised a whooping $2 billion piece of the puzzle. However, Appaloosa proceeded to walk away from the deal during the final days in April, leaving Delphi with no other alternatives.
Delphi took action against the hedge fund in hopes of making it deliver on the promised capital. The hedge fund bailed amidst what they thought was an increasingly risky situation. They also were concerned whether or not Delphi has an overreliance on GM.
Delphi’s next hearing is scheduled for August 26th in the U.S. Bankruptcy Court in New York. GM just reported a $15.5 billion quarterly loss, one of the largest in their history.
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