Report: Delphi liquidation looms large


August 29, 2008 - 6:00 am ET

(Reuters) -- Bankrupt U.S. auto parts maker Delphi Corp may end up being liquidated, with some U.S. plants being taken over by its former parent General Motors, the Wall Street Journal said, citing people involved in the bankruptcy process.

Even if that doesn't happen, GM's financial obligation could grow by billions of dollars, the paper said.

The report, however, quoted a Delphi spokesperson saying it doesn't intend to liquidate.

"We've not thrown that word around," the paper quoted Delphi spokesman Lindsey Williams.

"If that were our intent, we would not be working as feverishly as we are. We've been going down a lot of avenues to emerge from bankruptcy," Williams told the paper.

Delphi's Williams was not immediately available for comments.

Delphi, which filed for bankruptcy protection in October 2005, was about to exit bankruptcy protection in April when hedge fund Appaloosa Management and other investors pulled out of a plan that would have provided up to $2.55 billion to support Delphi's reorganization.

That left Delphi scrambling for alternatives, delaying its emergence from bankruptcy protection, and raised the cost of the reorganization process for GM.

When GM had spun off Delphi in 1999 it agreed to assume pension and health care obligations of thousands of Delphi employees represented by the United Auto Workers union should the supplier be unable to do so.

GM took a $2.8 billion charge in the second quarter for its exposure to Delphi.


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ENLARGE
Delphi headquarters in Troy, Michigan
 Photo credit: Reuters

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