Another Hedge Fund Fights Delphi Over GM Loan

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.


In Depth

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

Lifting of Foreign Ownership Limits Signals Sea Change in Vietnam's Capital Markets

Jul 28 2015 | 3:01pm ET

The lifting of restrictions on foreign ownership limits in Vietnam later this year...

 

Editor's Note