(RTTNews) - Friday, automotive parts manufacturer Delphi Corp. (DPHIQ. PK) said it has filed a suit against a funding consortium led by Appaloosa Management L.P, for backing out of the equity financing commitment of up to $2.55 billion that would have led to Delphi's successful emergence from Chapter 11 last month. The complaints were filed in the U.S. Bankruptcy Court for the Southern District of New York.
In a statement, Delphi said that the investor group led by Appaloosa vigorously pursued a prominent role in the company's restructuring, received over $60 million in fees for their commitments and positioned themselves to reap substantial profits after consummation of the Plan.
Besides asking the Bankruptcy Court to enter a judgment of specific performance requiring the plan investors to provide equity funding of up to $2.55 billion, Delphi has also sought compensatory and punitive damages. Delphi has been operating under bankruptcy protection since October of 2005.
In early April, the consortium comprising of Merrill Lynch, UBS, Goldman Sachs, Harbinger Capital, Pierce, Fenner & Smith, and Pardus Capital, led by Appaloosa backed out of the investment agreement with Delphi, alleging that Delphi had breached the funding agreement in a number of ways and one among them being seeking more loans from General Motors Corp.
(GM). Delphi is still General Motors' largest auto-parts supplier. Delphi was hoping to come out of the bankruptcy cloak with $6.1 billion in financing, including $2.8 billion in loans provided by General Motors.
DPHIQ.PK closed Friday's trade at $0.10 on a volume of 451,514 shares.
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