Auto Parts Maker Sues Hedge Fund, Seeks $2.5B

May 19 2008 | 11:35am ET

Bankrupt auto parts maker Delphi Corp. has finally taken legal action against an investor group led by hedge fund Appaloosa Management, and it isn’t seeking just a break-up fee.

The Troy, Mich.-based company sued the Appaloosa group on Friday, asking a judge to force it to live up to the terms of the $2.55 billion investment deal struck in August 2007. The equity agreement was part of the $6.1 billion Delphi needed to exit Chapter 11 bankruptcy; Appaloosa informed the company it was pulling out of the deal last month, alleging that Delphi had violated several tenets of its agreement.

At the time, Appaloosa accused Delphi of “reaching agreements with [former parent General Motors] that are materially inconsistent with the agreement and the plan.” But the auto parts maker tells a different tale.

“This is a story of trust and betrayal,” Delphi said in its U.S. Bankruptcy Court filing.

“Delphi believes that defendants back out of the transaction simply because they decided they did not like the economics of the deal they had agreed to, and that they never intended to close if the deal was underwater,” it alleged.

Appaloosa has yet to respond to Delphi’s suit.


In Depth

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Cash: An Asset In Adolescence

Aug 31 2017 | 3:34pm ET

If the investment industry has a rebellious teenager in the house today, that teenager...

 

From the current issue of