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Delphi Corp. Files Voluntary Chapter 11
October 13, 2005 |Estimated reading time: 1 minute
TROY, Mich. — Delphi Corp. announced the company and 38 of its domestic subsidies filed voluntary petitions for business reorganization under Chapter 11 of the U.S. Bankruptcy Code in an effort to preserve the value of the company and complete its transformation plan to resolve existing legacy issues and the high cost of U.S. operations. Delphi's non-U.S. subsidiaries were not included in the filing and will continue business without supervision from the U.S. courts, and will not be subject to the Chapter 11 requirements.
Delphi's goal management team will continue to handle the U.S. and global businesses. Delphi anticipates this restructuring and reorganization will conclude in early to mid-2007. The company plans to refinance its global operations with $4.5 billion in debt facilities, as well as additional committed and uncommitted financing lines and/or securitization facilities in Asia, Europe and the Americas. The financing includes $2.5 billion borrowed from prepetition revolver and term loan facilities and a commitment for up to $2 billion in senior secured debtor-in-possession (DIP) financing from a group of lenders.
The relief expected from the Bankruptcy court and hearings will permit the company to continue to pay wages, salaries and current benefits of U.S. hourly and salaried workers and certain retirement benefits without disruption. Further information on Delphi's U.S. restructuring, including access to court documents and other general information about the Chapter 11 filings, is available at www.delphidocket.com.
ATS Automation Tooling Systems commented on the impact of Delphi's Chapter 11 business reorganization. Delphi has been a long-term customer of ATS, which estimates it has about $10 million in current backorders with the various Delphi divisions subject to bankruptcy filing. ATS claims it will continue to work closely with Delphi as it manages its reorganization process. ATS currently claims accounts receivable and contracts in progress with Delphi to be in the range of $6 to 8 million, nearly all of which is in the company's Automation Systems Group.