Delphi makes progress to get out of bankruptcy

Labor unions are objecting to a management
compensation plan.

NEW YORK (AP) — Auto parts supplier Delphi Corp. said Thursday it has won approval from nearly all of its creditors for its plan to emerge from Chapter 11 bankruptcy protection.

The Troy, Mich.-based company is seeking a federal judge’s approval of the plan in a two-day hearing in New York that started Thursday. Among the objections Delphi faced were protests by labor unions over a management compensation plan that gives valuable equity stakes in the reorganized company to top executives.

Delphi reported that 81 percent of about 4,000 eligible creditors who voted on the plan have endorsed it.

Although such a large percentage of creditors accepted the plan, Delphi could face a challenge in court since the approval was not unanimous.

One class of creditors in the company’s diesel systems unit rejected the plan, and another class could be determined to have rejected the plan, depending on whether the court allows certain contested ballots to be counted.

“Although no assurances can be made, Delphi believes that the plan satisfies the requirements of the bankruptcy code and is confirmable notwithstanding the rejection of the plan by certain classes,” the company stated in its announcement.

U.S. Bankruptcy Judge Robert Drain approved a settlement on Thursday that Delphi had reached earlier with bondholders, removing one of the obstacles to the company emerging from bankruptcy. Delphi agreed to pay certain fees and expenses to bondholders as part of the deal.

The company also said Thursday it has reached an agreement to sell its wheel bearings business to Resilience Capital Partners for up to $44.2 million. The deal includes the sale of assets such as machinery, inventory, intellectual property and certain supplier contracts.

In a bankruptcy court filing, the company said it expected to have a $6.1 billion exit loan in place by early next month.

General Motors Corp. spun off its parts-making operations as Delphi in 1999. The company’s Delphi Packard Electric unit employs about 1,900 hourly and salaried workers in the Mahoning Valley.