Delphi Files Legal Action Against Appaloosa Management L.P. and Other Plan Investors
Release Date: May 16, 2008
TROY, Mich. — Delphi Corp. (PINKSHEETS: DPHIQ) today filed complaints against Appaloosa Management L.P. and eight other plan investors and related parties who on April 4, 2008 refused to honor their equity financing commitment of up to $2.55 billion and refused to participate in the closing that would have led to Delphi's successful emergence from Chapter 11 last month. The complaints were filed in the U.S. Bankruptcy Court for the Southern District of New York.
"We believe that the plan investors breached their obligations under the Equity Purchase and Commitment Agreement ("EPCA") that was the financial foundation for our Court-approved plan of reorganization," said David Sherbin, Delphi vice president, general counsel and chief compliance officer. "The plan investors vigorously pursued a prominent role in our restructuring, received over $60 million in fees for their commitments and positioned themselves to reap substantial profits after consummation of the Plan," Sherbin said. Delphi's court filing today alleges that the plan investors schemed to avoid their obligations rather than fulfill them.
Following the failed April 4 closing, Delphi retained special litigation counsel to evaluate the company's legal rights and report its recommendations to a committee of the Board of Directors. The litigation commenced today is the result of that process.
"Delphi has been unwavering in its commitment to meet the needs of our customers and employees and to achieve a successful reorganization," Sherbin said. "Our efforts to emerge were seriously undermined when we failed to close because of the actions of Appaloosa and the other plan investors. We hold them accountable for the harm they have caused to Delphi and our stakeholders."
Defendants named in the complaints are:
- Appaloosa Management L.P.;
- A-D Acquisition Holdings, LLC;
- Harbinger Del-Auto Investment Company, Ltd.;
- Pardus DPH Holding LLC;
- Merrill Lynch, Pierce, Fenner & Smith Incorporated;
- Goldman Sachs & Co.;
- Harbinger Capital Partners Master Fund I, Ltd.;
- Pardus Special Opportunities Master Fund L.P.; and
- UBS Securities LLC
Delphi asserts claims for breach of contract and fraud, and asks the Bankruptcy Court to enter a judgment of specific performance requiring the plan investors to provide equity funding in an amount up to $2.55 billion pursuant to the EPCA and to pay compensatory and punitive damages in an amount to be determined at trial.
ABOUT DELPHI'S CHAPTER 11 CASE
Delphi's Chapter 11 cases were filed on Oct. 8, 2005, in the United States Bankruptcy Court for the Southern District of New York and were assigned to the Honorable Robert D. Drain under lead case number 05-44481 (RDD). Delphi's First Amended Joint Plan of Reorganization was confirmed on January 25, 2008 and the Confirmation Order confirming the plan became a final order on February 4, 2008.
More information on Delphi's U.S. restructuring and access to court documents is available at www.delphidocket.com.
Information on the case can also be obtained on the Bankruptcy Court's website with Pacer registration: http://www.nysb.uscourts.gov. For more information about Delphi and its operating subsidiaries, visit Delphi's website at www.delphi.com.
Lindsey Williams
Media Contact
[1] 248.813.2528
Delphi
Al VanDenBergh
Investor Contact
[1] 248.813.3342