Delphi Corp. and several other auto suppliers are poised to sell numerous plants and operations during Chapter 11 reorganization.
Here is a buyer's guide to acquiring assets in bankruptcy, as provided by Barbara Rom, a fellow of the American College of Bankruptcy and partner in the Detroit office of law firm Pepper Hamilton LLP. Consult with the investment bankers representing the business. For Delphi, that's Rothschild Inc. See www.rothschild.com for information. Obtain an "offer" memorandum if one has been compiled. Begin a thorough review known as "due diligence." Decide what assets interest you, then convince the seller that your offer is the best deal. If you are the first bidder, you become known as a "stalking horse." This gives you several advantages, including a possible breakup fee if your offer is not the one accepted. It also restricts the seller from seeking further offers. The seller must share with you all competing initial bids. You also have the right to match those bids. A bankruptcy sale delivers the assets to the purchaser free and clear of most liens and claims. The purchaser gets to pick the existing contracts which the buyer wishes to assume. This means leases, customers' purchase orders, purchase orders to vendors -- even labor and employment contracts under certain circumstances.