Delphi Sale Hits Speed Bump
The quick sale outlook for Delphi hit a speed bump when Bankruptcy Judge Robert Drain ordered Delphi to conduct an ‘open auction’ for its assets. This action has distressed-debt investors circling as they have been crying foul regarding the Obama Administration’s handling of the sale. You see as DIP financiers, these investers generally have the right to take control of the company if they can’t be paid in full. GM and the gov’t have been entrenched in their view that Platinum was the only acceptable buyer. Not everyone believes this to be true
Certainly, Judge Robert Drain wasn’t when he commented, “I don’t know what makes Platinum acceptable to GM and why Platinum is unique. Unless I hear more, there’s something going on that doesn’t to me make sense.” He also commented, “As far as I am concerned, they’re (Platinum) just guys in suits. Why can’t other guys in suits pay more?”
It should be noted that as DIP Financier for the GM and Chrysler Bankruptcies the Gov’t said it had wide latitude to determine the companies’ future. But when it comes to Delphi’s private lenders, it has taken a very different position. Judge Drain deserves an applause for putting the brakes on this decision.
In the meantime, media outlets have reported that well-known investor Carl Icahn is considering making another run at Delphi Corp. Perhaps complimenting his auto parts company Federal Mogul Corp. Suitors now have until July 10th to make competing offers for Delphi.
