DETROIT -- A hedge fund run by shareholder activist David Tepper is trying to stop Delphi Corp. from throwing out its union agreements and voiding thousands of contracts with General Motors.
In two preliminary objections filed Monday, April 17 in U.S. Bankruptcy Court for the Southern District of New York, Appaloosa Management LP argues, among other things, that investors need time to consider and analyze Delphi's motions.
Delphi filed a motion on March 31 to reject collective bargaining agreements with the UAW and five other major unions. Judge Robert D. Drain is expected to consider that motion at a May 9 hearing. Three days later, he is expected to consider Delphi's motion to reject 5,472 unprofitable contacts with GM.
Tepper, who controls 9.3 percent of Delphi's stock, has spearheaded efforts to form a committee representing equity holders in the company's Chapter 11 bankruptcy protection case. The U.S. trustee will not appoint the committee until after Monday, April 24, which is the deadline for shareholders to express interest in joining the group.
Appaloosa says it appears the committee won't be formed in time to participate meaningfully in any analysis of Delphi's proposal to reject union contracts.
Appaloosa said Delphi had not demonstrated that shareholders favor rejecting the collective bargaining agreements or modifying retiree welfare benefits. It further says Delphi has failed to identify "quantifiable benefits" from taking such actions, and that it may be able to negotiate more favorable agreements once the current pacts expire.
In objecting to Delphi's attempt to throw out GM contracts, Appaloosa said the company had not shown that rejecting the pacts "represents the sound exercise of business judgment."
The objections appear to be an attempt by Appaloosa to get Delphi to respond to previous requests for documents.
In the GM contract objection, Appaloosa says, "Debtors have taken the position that they will not respond to discovery requests unless the party seeking discovery has filed an objection in response to one of the Debtors' motions."
Delphi had no immediate comment on the filing.
You may e-mail Leslie J. Allen at [email protected]