AFSCME 3357-HOF'S BLOG

From the "There's $2 billion you'll never see again" File
GM to Loan Delphi $2 Billion

In previous posts about Delphi, I wondered where the cash was going to come from to cover for the operational losses that Delphi was posting while under Chapter 11 bankruptcy protection. Not too surprisingly, General Motors appears to be a big part of the answer.

According to the Detroit News, GM is proposing to loan Delphi an additional $2 billion to allow Delphi to emerge from chapter 11. In the original Delphi plan, Delphi was supposed to pay General Motors, but now GM is proposing to send a couple more billion dollars in cash to Delphi, and to end up with an equity stake in Delphi as well as IOUs. The catch: the other investors in the Delphi bankruptcy financing are objecting to the terms of the deal as being too favorable to GM. Of course, those investors aren't rushing to invest their own good money in new deck chairs for the Delphi-Titanic.

The Detnews also states that Delphi has failed to contribute $2 billion in pension fund obligations accrued since 2005. Waivers of these payments won't necessarily be coming from the appropriate government authorities.

The current deadline to have a deal done is April 4, but deadlines have come and gone in the Delphi case before. I would be surprised if this doesn't go beyond April 4 with no resolution.