Hedge Fund Fires Back at Delphi, Seeks Damages

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

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