NEW YORK (Reuters) - Auto parts maker Delphi Corp DPHIQ.PK is preparing a revised plan of reorganization to file with the U.S. Bankruptcy Court, but does not know when such a plan will be ready, a company spokesman said on Friday.
Delphi, which filed for bankruptcy protection in the U.S. in October 2005, said in April it would have to rewrite its reorganization plan after investors backed out of a $2.55 billion equity investment to support it.
“You can expect to see at some point the filing of a revised plan of reorganization,” Lindsey Williams told Reuters. “I just don’t have the time frame for you.”
Williams said Delphi was still engaged in discussions with former parent General Motors Corp (GM.N), with Delphi’s statutory committees and with government agencies regarding Delphi’s pension funding issue.
“We are in discussions with the same parties with regard to modification to our plan of reorganization, such that would position the company for emergence,” he said, adding that talks were “progressing.”
Asked about whether Delphi could be forced to liquidate, Williams said: “Our efforts are to successfully emerge.”
Delphi Chairman Steve Miller, who was chief executive when the supplier filed for Chapter 11 protection, said in April that the rewrite could take at least several months. That was before rising gas prices further pressured U.S. auto sales.
With U.S. automakers struggling to maintain liquidity through the downturn and severe clamps on lending due to credit market turmoil, Delphi has had to seek more support from former parent General Motors Corp (GM.N) while it rewrites the plan.
But Highland Capital Management LP, a Delphi bond holder that has explored equity offers for the company in the past, has objected to Delphi borrowing an additional $300 million from GM.
The additional borrowing from GM would merely sink more cash into Delphi’s money-losing U.S. operations and erode the value of its profitable assets outside North America, Highland said in court documents. A court hearing is set for September 23.
“This is even more critical now when it is unclear whether Delphi will be able to pay its own creditors in full,” Highland Capital said last week.
Delphi, whose debtor-in-possession financing runs through the end of 2008, also faces potentially billions of dollars of claims for salaried and hourly workers pension obligations if it does not complete a planned transfer of liabilities to GM.
The parts maker let funding waivers lapse earlier in 2008 as it was preparing to emerge from court protection, triggering a deadline of September 30 to complete transfers agreed to by GM and avoid substantial additional financial obligations.
The Pension Benefit Guaranty Corp told GM and Delphi in mid August that the PBGC claim could reach $8 billion if hourly and salaried plans were to terminate.
Delphi has cut thousands of jobs and shed several businesses in its reorganization and has intended to freeze its pension plans upon emergence from bankruptcy.
“As we continue to work through the solution to the funding issue, we’re going to move forward with that since emergence has been delayed,” Williams said.
Reporting by Nick Zieminski in New York, and David Bailey and Soyoung Kim in Detroit; Editing by Andre Grenon