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Posts Tagged ‘u.s. bankruptcy court’

Delphi Finally Close to Emerging from Bankruptcy

Private equity firm provides the critical mass and capital.

by on Jun.01, 2009

Tom Gores of PlatinumEquity

"We know the business very well and understand its potential."

After spending nearly four years mired in bankruptcy court, Delphi Corporation may finally emerge from behind Chapter 11 protection as an asset of a Los Angeles-based private equity firm rather than under its own control.

Delphi, via a transaction with Parnassus Holdings II, LLC, an affiliate of Platinum Equity, and with the support of GM Components Holdings LLC, an affiliate of General Motors Corporation, has put together a new emergence plan that could stave off liquidation if it works. The President’s Auto Task Force worked behind the scenes to organize the deal.

Platinum is not new to Delphi. Platinum had bid successfully for Delphi’s Steering Gear plant last year but withdrew its bid last winter after the credit crisis made it difficult to obtain financing, but had indicated it was prepared to make another bid when the conditions were right.

This time, however, instead of taking the steering gear business, Platinum will take on all of Delphi’s remaining business.

The most significant development is Platinum will now get control of Delphi’s overseas business, which had not been part of the U.S. Bankruptcy Court proceedings. Parnassus will operate Delphi’s U.S. and non-U.S. businesses going forward with emergence capital and capital commitments of approximately $3.6 billion and without the labor-related legacy costs associated with the North American sites. They are being acquired by GM Components Holding LLC together with Delphi’s global Steering business.

Delphi will continue the wind-down and disposition of several discontinued operations, primarily located in the United States, through a reorganized entity expected to be called DPH Holdings Co. The sites include: Athens, Ala.; Fitzgerald, Ga.; New Castle, Ind.; Olathe, Kan.; select sites in Flint and Saginaw, Mich.; Clinton, Miss.; select sites in Columbus, Cortland, Dayton, Kettering and Warren, Ohio; a leased facility in Columbia, Tenn.; and Oak Creek Wisc.

Delphi Steering was spun off in 1999 as part of GM’s ill-fated spin off of Delphi. It has a 100-year history of innovation as well as comprehensive in-house design and development capabilities.    (more…)

Decision Day in Court for Fiat Takeover of Chrysler

Hearing set for tomorrow on whether a sale proceeds as judge refuses stay. Precedent set will likely determine GM’s fate.

by on May.26, 2009

Chrysler LLC Vice Chairman Jim Press and then Senator Barack Obama

The political momentum and legal logic of the Chrysler case argues for going forward.

Judge Arthur Gonzales sitting in the U.S. Bankruptcy Court for the Southern District of New York will determine starting tomorrow morning if the sale of virtually all of the good assets of bankrupt Chrysler LLC to Fiat SpA will proceed. If he doesn’t approve, the company will liquidate, taking with it any hope of preserving U.S. manufacturing jobs at the once proud Michigan automaker.

Chrysler’s largest creditors, 98% of them, support the plan. The United Auto Workers Union and the Canadian Auto Workers Union have made once unthinkable concessions to support the plan. And the judge, thus far, has moved the case along the lines that members the U.S. Treasury’s Auto Task Force outlined in a background briefing to media on the morning that President Obama made the restructuring announcement and Chrysler LLC filed for court protection. Pundits who said it couldn’t be done swiftly have, thus far, been proven wrong.

Political momentum and legal logic for Chrysler and GM

With Treasury and President Obama supporting the latest version of a restructuring plan that Chrysler has put together, it is my bet that a new Chrysler Group will emerge from court protection soon. Then the really hard work begins. It is by no means certain that Chrysler and its Dodge and Jeep brands can generate enough sales to remain viable in the toughest global car market since the Great Depression. And the Fiat small cars and engines that are its $10 billion contribution to the plan are years away from production reality.

Some creditors and dealers remain the only significant objectors to the Chrysler sale. However, the political momentum and legal logic of the Chrysler case argues for going forward. Yes, it is a bet, and yes we might just be prolonging the agony, but dissolution right now appears to be a worse choice.  

The same political push and legal logic are also directly applicable to a pending GM bankruptcy filing, which could come at any time.  GM’s debt-for-equity swap for $27 billion worth of bonds expires this midnight, and its bondholders taking the same “no-way” approach that Chrysler’s did.   (more…)

Fired Chrysler Dealers Want Bankruptcy Court to Slow Down on Asset Sale

Dealers facing termination in June are making a last minute bid to head off the Fiat sale.

by on May.20, 2009

Golling Chrysler Jeep Dodge in Bloomfield Hills, Michigan

"The relief Chrysler seeks is unprecedented and improper," claims a dealer group.

The newly organized “Committee of Chrysler Affected Dealers” has filed an objection to Chrysler’s proposed asset sale to Fiat that is key to Chrysler emerging from bankruptcy. Lawyers for the group are asking the U.S. Bankruptcy Court in Manhattan to delay hearings that would approve the asset sale and rejection of the dealer franchise agreements. The hearings are now set for May 27 and are key to Chrysler’s early exit from bankruptcy.

Jim Press, Chrysler president and vice chairman, said last week that he was confident Chrysler’s decision to terminate dealers will withstand legal challenges.

The dealer’s lawyers, however, insist the termination is improper.

“Chrysler’s proposed asset sale and request for immediate termination of dealer franchises will destroy several hundred independent businesses, ruin the livelihoods of their owners, cause the loss of thousands of jobs and precipitate inevitable personal and business bankruptcies flowing from the closing of the affected dealers,” said Stephen D. Lerner, head of the bankruptcy and restructuring practice at Squire, Sanders & Dempsey. Lerner leads the team representing the dealer committee, which represents the collective interests of nearly 300 dealers in 45 states.    (more…)

Chrysler Bankruptcy Proceeding Apace

Court approves process for transaction with Fiat and creation of a new Chrysler. Dissident creditors withdraw.

by on May.08, 2009

NY Bankruptcy Court Seal

The order is signed, and unless another bidder emerges, the Fiat takeover is about to be sealed and delivered.

The U.S. Bankruptcy Court in Manhattan has just entered an order approving a process for the sale of virtually all of Chrysler’s assets. Unless an alternative offer arises, the deal with Fiat will proceed before 60 days have expired from the original April 30, 2009 filing, as the U.S. Treasury Department maintained.

In a clear victory for Main Street, the dissident creditors that were singled out as speculators by President Obama last month also withdrew from the proceedings today. The law firm representing these parties — after months of unsubstantiated claims about how much debt was held, along with an ongoing refusal to reveal what firms held the debt, all the while trying the case in the media — met the real court.  

Earlier this week, Judge Gonzalez ordered White & Case, the law firm representing the dissident debtholders, to reveal who their clients were, what debt they actually held, and how much they paid for it.

“After a great deal of soul-searching and quite frankly agony, Chrysler’s Non-TARP lenders concluded they just don’t have the critical mass to withstand the enormous pressure and machinery of the U.S. government,” said Tom Lauria, the White & Case attorney representing the group. “As a result, they have collectively withdrawn their participation in the court case.”

Hastening the withdrawal, no doubt, was the fact that the group had nowhere near the secured debt that news organizations such as the New York Times or the wire services were publicizing. As a famous jurist once postulated “sunshine is the best disinfectant.”

The momentum for an early resolution of the Chrysler matter now appears to be overwhelming, since the substantial new financial commitments from the U.S. and Canadian governments require the consummation of a transaction with Fiat within 60 days and make Debtor in Possession financing available for only that period.    (more…)