Friday, 26 August 2016
Last updated 13 hours ago
Aug 22 2008 | 11:05am ET
Delphi Corp. has a second hedge fund thorn in its side.
The bankrupt auto-parts maker, which is suing a group led by Appaloosa Management over a failed investment deal, finds that Appaloosa is not the only hedge fund that objects to it borrowing more from former parent General Motors Corp. Highland Capital Management, among the company’s bondholders, has asked the U.S. Bankruptcy Court in Manhattan to prevent Delphi from borrowing another $300 million from GM.
In court papers, Highland, which is backed by CR Intrinsic Investors, led by Steven Cohen of SAC Capital Advisors fame, said that Delphi’s North American operations “continue to lose staggering sums of money, and drag down the rest of the business.”
“The Debtor’s continued willingness to operate a money-losing business that burns cash for the benefit of GM is beyond comprehension,” Highland said.
Earlier this month, GM agreed to increase its total loan to Delphi to $950 million to keep a key parts supplier liquid. The greater involvement of GM in Delphi’s exit from bankruptcy also led Appaloosa to bail on its $2.55 billion investment deal, which would have allowed Delphi to exit bankruptcy protection.