March 25, 2006

Delphi creditors committee demands GM documents

By David Bailey

CHICAGO (Reuters) - A committee for unsecured creditors in
Delphi Corp.'s bankruptcy on Friday demanded General Motors
Corp. documents detailing ties to its former parts unit dating
back to 1997.

GM is seeking unsecured creditor status in a bid to offset
up to $12 billion of costs from wage and benefit agreements it
made for the Delphi spin off. The creditors plan to challenge
GM's claim, which could reduce recoveries they might receive
from the reorganization.

The documents request ranged from labor and health care
agreements, through financial and board records of GM's 1999
spinoff of Delphi, to guarantees the automaker gave Delphi.

"Even a cursory examination of the record in these cases
demonstrates how intertwined GM and the debtor are, and how the
claims that each may have against the other are integral to the
outcome of these cases," the committee said in court papers.

The documents would help the committee understand the
claims GM has or may assert against Delphi under the terms of
the spinoff and claims Delphi has against GM, issues that must
be addressed quickly because of ongoing labor talks, it said.

The committee asked a New York bankruptcy judge to rule on
its request April 7, the same day Delphi wants the court to
approve sweeping early retirement incentives for hourly workers
it reached in a deal with GM and the United Auto Workers.

The retirement incentives cover up to 17,000 of Delphi's
more than 34,000 U.S. hourly workers, while 5,000 other workers
would have the right to return to GM. Talks on possibly far
more contentious wage and benefit cuts are ongoing.

Delphi has said it must have at least the framework of a
comprehensive deal on wages, benefits and job cuts by March 30
or it will start the court process of voiding labor contracts
and changing retiree benefits the following day.

The documents requested could help determine if GM is an
unsecured creditor, and affect the amount and priority of GM's
claims, the committee said. Delphi cited high wage and benefit
costs inherited from GM as a main reason for its bankruptcy.

GM most recently said it believes its exposure to Delphi's
bankruptcy to range from $5.5 billion to $12 billion, with a
figure toward the lower end more likely based on agreements to
cover worker benefits should Delphi fail.

"It's not surprising the creditors committee would seek to
nullify some of the claims GM has, given the potential size of
our claims," GM spokesman Jerry Dubrowski said.

On Friday, the committee said it could not wait for GM to
file a claim before seeking documents needed to respond, citing
a likely rapid pace of negotiations on wage and benefit cuts.

A challenge to GM's claims, if successful, could increase
the return for other unsecured creditors and the remote
possibility of a stock holder recovery in the reorganization of
Delphi, which filed for Chapter 11 protection last October.

Bankruptcy Judge Robert Drain has approved formation of a
committee to represent shareholder interests. However, he
expressed doubts for a material shareholder recovery.

The creditors committee hinted at a potential challenge to
GM's claims weeks ago when it opposed a GM request to be added
as a member to the unsecured creditors committee and said the
committee was examining the circumstances of the spinoff and
the array of agreements Delphi made that benefited GM.

At the time, the committee said GM, Delphi and the unions
had a powerful incentive to solve labor cost issues, but no
incentive to limit eventual GM claims against the estate.