Delphi reaches deal to settle lawsuit against hedge fund that pulled out of financing deal
By APThursday, October 29, 2009
Delphi reaches settlement with Appaloosa
NEW YORK — Delphi said Thursday that it reached a settlement in a lawsuit it filed last year against a hedge fund after it pulled out of a deal to lift the auto supplier out of bankruptcy protection.
Delphi Spokesman Lindsey Williams confirmed Thursday that a settlement with Appaloosa Management LP had been reached, but said that the company isn’t releasing any details.
Representatives for Appaloosa did not immediately return a call for comment.
Appaloosa, run by Goldman Sachs alum David Tepper, led a group of investors in 2007 that agreed to inject as much as $2.55 billion into Delphi in exchange for stock, but the group withdrew from the deal in April 2008.
Delphi sued, claiming that the Appaloosa group urged lenders to withdraw commitments for $6.1 billion in financing it needed to exit bankruptcy. Delphi argued that Appaloosa and Tepper were liable for what other members of the group may have done to discourage lenders.
The collapse of the deal was a significant setback in Delphi’s plan to emerge from bankruptcy protection. At the time, the auto supplier had already spent two and a half years under court oversight.
After that, Delphi struggled to find the financing it needed to restructure. Those troubles were complicated by the collapse of investment banks in the fall of 2008 and the drop-off in new vehicle sales.
Months later, those same factors also helped drive both General Motors and Chrysler into bankruptcy.
The auto supplier finally emerged from Chapter 11 earlier this month — nearly four years to the day it filed — after reaching a deal with its lenders and receiving a promise for billions in aid from GM.
Detroit-based GM once owned Delphi and remains dependent on it for about 10 percent of the parts that go into its North American vehicles. As part of the deal it also agreed to take back some of the supplier’s businesses.
Delphi is now a private company officially known as DPH Holdings LLP.
