Delphi creditors join suit against hedge fund
Monday, June 2, 2008 : PermalinkNew York (HedgeCo.Net) – Appaloosa Management is getting hit from all angles in their attempt to walk away from the deal they struck with Delphi. The hedge fund is not only being sued by the auto parts maker, but now creditors of Delphi Corp. are seeking to intervene on the case.
The lawsuit stems from an original agreement, led by Appaloosa, to provide Delphi with $2.55 billion in aid to help them exit Chapter 11. Though $6.1 billion was needed to make that happen, it looked as if Delphi was going to pull it together, thanks largely to a $2 billion influx of cash from former parent company, General Motors.
Appaloosa walked away from the deal at the deadline, claiming that Delphi had violated several agreements and had an over reliance on GM.
Now, creditors are siding with Delphi, saying that Appaloosa walked away simply because they lost interest in the deal.
“Because of the failure to provide the agreed-upon investment financing, distributions that should have been made to creditors pursuant to the plan have not been made,” the Creditors Committee said in the court papers.
The committee said it "should have the right" to join in the lawsuit because they would have "directly benefitted" from Appaloosa’s investment.
Delphi is seeking a ruling that would force Appaloosa to deliver on their original promise.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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