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Case
| HBS Case Collection
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2009
(Revised from original 2008 version)
Restructuring at Delphi Corporation (A)
by
Stuart C. Gilson and Sarah L. Abbott
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Abstract
Delphi Corporation, operating under Chapter 11 bankruptcy protection, has filed a plan of reorganization with the court, under which a consortium of hedge funds led by Appaloosa Management will invest up to $2.6 billion in new equity. Also participating in the plan is General Motors which, as the former parent of Delphi, has agreed to fund a portion of the massive pension and retiree health care liabilities that Delphi incurred when it separated from GM in a prior spin-off. The company has also had to seek significant financial concessions from the United Auto Workers, without which it may not survive as a going concern. Greatly complicating the negotiations is the significant uncertainty surrounding the value of Delphi's business and the complexity of its capital structure.
Keywords: Restructuring;
Capital Structure;
Private Equity;
Insolvency and Bankruptcy;
Investment Funds;
Labor and Management Relations;
Auto Industry;
Service Industry;