New York (HedgeCo.Net) – Hedge Fund Appaloosa Management may have tried to turn their back on Delphi, but somehow they just can’t seem to get away.  Ensnarled in a nasty court battle with the Michigan auto parts supplier, the judge is now reconsidering original fraud claims brought against the New Jersey based hedge fund. 

Delphi had sued the investor group headed by Appaloosa that originally agreed to inject $2.55 billion into the bankrupt company that was supposed to help lift them out of Chapter 11.  The investors commitment was going to provide a much needed piece of the $6.1 billion in financing that Delphi needed to secure by the April deadline.  When Appaloosa walked away as the deadline neared, Delphi was left scrambling, clinging only to former parent company General Motors. 

Judge Robert Drain told a Manhattan Court this week “It seems to me that I was unclear in what aspects of the allegations needed to be dealt with…I may have well been wrong.”

Drain said that when he dismissed this claim for fraud originally, he did not feel that Appaloosa made “affirmative misrepresentations” to Delphi about plans to scrap the financing deal.  Now, Drain is reconsidering, saying that any failures to communicate a change of mind could very well constitute fraud.

Both parties were asked to gather more information and submit briefs on the fraud claim by the next hearing on October 21.  Delphi is seeking damages from Appaloosa and a ruling that could make them deliver their original financial obligation.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Tags: appaloosa-management-lp, bankrupty, bastion, brokerages, cayman-government, disapproval, due-diligence-service, evidentiary-hearing, harbinger, market-risk, proper-steps, unsecured-creditors

New York (HedgeCo.Net) – As if trying to secure $6.1 billion in financing to exit bankruptcy isn’t enough of a headache, now Delphi has to deal with counterclaims by hedge fund Appaloosa Management who is demanding that the U.S. auto parts supplier pay them $82.5 million in fees plus expenses.

Appaloosa claims they are entitled to that money because Delphi violated the terms of their agreement.  The original agreement entailed Appaloosa heading the rescue of Delphi, offering them $2.55 billion if they secured the rest of the capital needed to exit Chapter 11.  On the last day of the deadline, Appaloosa walked away from their commitment, leaving Delphi high and dry with little alternatives.

Delphi then proceeded to sue Appaloosa, hoping to make them deliver on their promise of the much needed capital.   The hedge fund however, expressed concern on the company’s overreliance to once parent company GM, who guaranteed Delphi a $2 billion piece of their financial puzzle.

Delphi spokesperson Lindsay Williams said, “"We continue to believe that the plan investors failed to honor their commitment at the April 4 closing, causing unnecessary harm in delaying our emergence from Chapter 11. We’ll continue to pursue legal remedies in court.”

In its counterclaim, Appaloosa sates that the agreement with General Motors “violates the express terms."

Appaloosa is just one of the would-be investors who is seeking a piece of the $82.5 million.  Others include Harbinger Capital Partners, Merrill Lynch, UBS and Pardus Capital Management, who all commited to Delphi’s rescue.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com

Tags: bankrupty, brokerages, disapproval, due-diligence-service, harbinger, investment-commitments, liquidity, market-risk, mistrust, pergam-finance, takeover