Delphi Creditors Committee Demands GM Documents

A committee for unsecured creditors in Delphi Corp.'s bankruptcy on Friday demanded General Motors Corp. (GM) 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.