Delphi Corp. has sought a three-month extension of its right to control its bankruptcy reorganization, saying the credit crunch has made it difficult for the company to obtain Chapter 11 exit-financing.
In papers filed with the U.S. Bankruptcy Court in Manhattan late Friday, Delphi asked a judge to extend until March 31 its deadline to develop a Chapter 11 plan. That deadline currently is set to expire Dec. 31.
The company, the largest supplier of parts to General Motors Corp., also sought to move until the end of May its deadline to win creditors' support for the plan.
Delphi has been in bankruptcy reorganization since October 2005. As credit markets have tightened recently, Delphi has scaled back the amount of money it intends to borrow to pay off its creditors. That has resulted in changes to its Chapter 11 plan and caused delays, it said.
In its court papers, Delphi cited "severe dislocations in the capital markets that began late in the second quarter of 2007 and that have increased in severity during the third and fourth quarters of 2007." Those financing difficulties, among other things, forced the company to offer its creditors repayment terms that were less generous than it initially expected.
Cash payments, for example, were reduced by $3 billion. The company amended its reorganization plan to instead give unsecured creditors, which are being paid mainly with new Delphi stock, the option to buy additional shares at a discount through a rights offering. GM will get a combination of cash, new debt and new convertible preferred stock.
I don't think I need to tell anyone how important Delphi is in Michigan.